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Essay on Balance Sheet and Factory Overhead

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Chrome-It, Inc., manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, stamping and plating, and two service departments, power and maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30:
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.:.
Additional information:
1. The balance of the materials account represents the following:
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.:.
The company uses the FIFO method of accounting for all inventories. Material A is used in the stamping department, and materials B and C are used in the plating department.
2. The balance …show more content…

i. After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead.
j. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month.
k. During the month, Jobs 803 and 905 were sold at a markup of 50% on cost.
l. Received $55,500 from customers in payment of their accounts.
m. Checks were issued in the amount of $43,706 for payment of the payroll.
Required:
1. Set up the beginning trial balance in T-accounts.
2. Prepare materials inventory ledger cards and enter October 1 balances.
3. Set up job cost sheets as needed.
4. Record all transactions and related entries for the month of October and post to T-accounts.
5. Prepare a service department expense distribution work sheet for October.
6. At the end of the month:
a. Analyze the balance in the materials account, the work in process account, and the finished goods account.
b. Prepare the statement of cost of goods manufactured, income statement, and balance sheet for October 31.

SOLUTION:

1.

|Cash |
| | |
|Oct. 1 Balance

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