Finch Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the unfinished chairs to hobby shops. The following transactions apply to Finch’s operations for its first year, Year 1. (Assume that all transactions are for cash unless otherwise stated.) The company was started when it acquired a $130,000 cash contribution from the owners. The company purchased $34,000 of direct raw materials and $800 of indirect materials. Indirect materials are capitalized in the Production Supplies account. Direct materials totaling $14,000 were issued to the cutting department. Labor cost was $51,600. Direct labor for the cutting and assembly departments was $18,000 and $25,000, respectively. Indirect labor costs were $8,600. The predetermined overhead rate was $0.50 per direct labor dollar in each department. Actual overhead costs other than indirect materials and indirect labor were $13,200 for the year. The cutting department transferred $24,000 of inventory to the assembly department. The assembly department transferred $40,000 of inventory to finished goods. The company sold inventory costing $36,000 for $63,000. Selling and administrative expenses were $6,000. A physical count revealed $300 of production supplies on hand at the end of Year 1. Assume that over- or underapplied overhead is insignificant. Required: Record the data in T-accounts. Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant. Close the revenue and expense accounts. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1.

Name: Finch Corporation makes rocking chairs. The chairs move through two de
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Description: Finch Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the un

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter2: Analyzing Transactions Into Debit And Credit Parts

Section2.1: Using T Accounts

Problem 1OYO

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Finch Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the unfinished chairs to hobby shops. The following transactions apply to Finch’s operations for its first year, Year 1. (Assume that all transactions are for cash unless otherwise stated.)

The company was started when it acquired a $130,000 cash contribution from the owners.
The company purchased $34,000 of direct raw materials and $800 of indirect materials. Indirect materials are capitalized in the Production Supplies account.
Direct materials totaling $14,000 were issued to the cutting department.
Labor cost was $51,600. Direct labor for the cutting and assembly departments was $18,000 and $25,000, respectively. Indirect labor costs were $8,600.
The predetermined overhead rate was $0.50 per direct labor dollar in each department.
Actual overhead costs other than indirect materials and indirect labor were $13,200 for the year.
The cutting department transferred $24,000 of inventory to the assembly department.
The assembly department transferred $40,000 of inventory to finished goods.
The company sold inventory costing $36,000 for $63,000.
Selling and administrative expenses were $6,000.
A physical count revealed $300 of production supplies on hand at the end of Year 1.
Assume that over- or underapplied overhead is insignificant.

Required:

Record the data in T-accounts.
Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant.
Close the revenue and expense accounts.
Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1.

Complete this question by entering your answers in the tabs below.
Req A to C
Ending Balance
Req D1 CGM
Sched
Ending Balance
a. Record the data in T-accounts.
b. Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant.
c. Close the revenue and expense accounts.
Note: The cash expenditures in event No. 2 should be recorded as separate amounts in the Cash account. The closing entry for revenue and expenses should be made
in one entry.
Debit
Debit
Req D2 Inc
Stmt
Debit
Cash
Raw Materials
Req D3 Bal
Sheet
Manufacturing Overhead
Credit
Credit
Credit
Ending Balance
Ending Balance
Closing
Debit
Debit
Debit
Common Stock
Retained Earnings
Revenue
Credit
Credit
Closing
Credit
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Ending Balance
Ending Balance
Ending Balance
Ending Balance
Ending Balance
Debit
Debit
Debit
Work in Process-Assembly
Debit
Manufacturing Overhead
Debit
Work in Process-Cutting
Finished Goods
Production Supplies
Credit
Credit
Credit
Credit
Credit
Closing
Ending Balance
Ending Balance
Ending Balance
< Req A to C
Debit
Debit
Revenue
Debit
Cost of Goods Sold
Credit
Req D1 CGM Sched >
Credit
Selling & Administrative Expenses
Closing
Credit
Closing

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