In the course of routine checking of all
(1)
Work in Process Inventory Cash | 25,000 | 25,000 |
(This is for materials put into process, I don’t find the record that we paid for these, so I’m crediting Cash because I know we’ll have to pay for them sooner or later.)
(2)
Manufacturing |
12,000 | 12,000 |
(This is for bonuses paid to salespeople. I know they’re part of overhead, and I can’t Und an account called “Non-Factory Overhead” or “Other Overhead” so I’m putting it in Manufacturing Overhead. I have the check stubs, so I know we paid these.)
(3)
Wages Expense Cash | 120,000 | 120,000 |
(This is for the factory workers’ wages. I have a note that employer payroll taxes arc $18,000. I still think that’s part of wages expense and that we’ll have to pay it all in cash sooner or later, so 1 credited Cash for the wages and the taxes.)
(4)
Work in Process Inventory Raw Materials Inventory | 3,000 | 3,000 |
(This is for the glue used in the factory. I know we used this to make the products, even though we didn’t use very much on any one of the products. I got it out of inventory, so I credited an inventory account.)
Instructions
(a) How should Joe have recorded each of the four events?
(b) If the entry was not corrected, which financial statements (income statement or
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
Managerial Accounting: Tools For Business Decision Making, Seventh Edition Wileyplus Card
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education