#5-26 During May, the following transactions were completed and reported by Jerico Company: Materials purchased on account, $60,100. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,800. Payroll for the month: direct labor, $75,000; indirect labor, $36,000; administrative, $28,000; sales, $19,000. Depreciation on factory plant and equipment, $10,400. Property taxes on the factory accrued during the month, $1,450. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200. Factory utilities, $5,500. Advertising paid with cash, $7,900. Depreciation on office equipment, $800; on sales vehicles, $1,650. Legal fees incurred but not yet paid for preparation of lease agreements, $750. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month. Cost of jobs completed during the month, $160,000. The company also reported the following beginning balances in its inventory accounts: Materials Inventory $ 7,500 Work-in-Process Inventory 37,000 Finished Goods Inventory 50,000 Instructions: 1) Prepare the journal entries to record the transactions occurring in May. 2) Prepare T-accounts for Material Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post all relevant entries to these accounts. 3) Prepare a statement of Cost of Goods Manufactured. 4) If the overhead variance is all allocated to Cost of Goods Sold, by how much will Cost of Goods Sold decrease or increase?
#5-26
During May, the following transactions were completed and reported by Jerico Company:
-
Materials purchased on account, $60,100.
-
Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,800.
-
Payroll for the month: direct labor, $75,000; indirect labor, $36,000; administrative, $28,000; sales, $19,000.
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Depreciation on factory plant and equipment, $10,400. -
Property taxes on the factory accrued during the month, $1,450.
-
Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
-
Factory utilities, $5,500.
-
Advertising paid with cash, $7,900.
-
Depreciation on office equipment, $800; on sales vehicles, $1,650.
-
Legal fees incurred but not yet paid for preparation of lease agreements, $750.
-
Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month.
-
Cost of jobs completed during the month, $160,000.
The company also reported the following beginning balances in its inventory accounts:
| Materials Inventory | $ 7,500 |
| Work-in-Process Inventory | 37,000 |
| Finished Goods Inventory | 50,000 |
Instructions:
1) Prepare the
2) Prepare T-accounts for Material Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory.
3) Prepare a statement of Cost of Goods Manufactured.
4) If the overhead variance is all allocated to Cost of Goods Sold, by how much will Cost of Goods Sold decrease or increase?
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