College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
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Textbook Question
Chapter 27, Problem 1CE
LO2 Prepare
- (a) Factory
overhead is applied at a rate of 75% of direct labor costs. At the end of the year, the direct labor costs associated with the jobs in process totaled $8,000. - (b) A physical count of factory supplies at the end of the year shows that $4,920 of factory supplies were used during the year.
- (c)
Depreciation expense for the year on the factory building was $8,700 and on factory equipment was $11,600, a total of $20,300. - (d) The factory overhead account has a debit balance of $186,500 and a credit balance of $183,900 [after recording adjustments (a) through (c)].
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16.
At the end of the year, a company finds that it has under-applied factory overhead by $1,000. What would be the most common accounting treatment in this case?
Increase Assets by $1,000 on the Balance Sheet
Increase Profit by $1,000 in the Income Statement
Increase Liabilities by $1,000 on the Balance Sheet
Decrease Cost of Goods Sold by $1,000 in the Income Statement
Increase Cost of Goods Sold by $1,000 in the Income Statement.
1.
How much manufacturing overhead was incurred during the year? Is manufacturing overhead underallocated or overallocated at the end of the year? By how much?
2.
Were the jobs overcosted or undercosted? By how much?
Manufacturing overhead costs. . . . . .
$630,000
Direct labor cost. . . . . . . . . . . . . . . . . .
$1,550,000
Machine hours. . . . . . . . . . . . . . . . . . . .
90,000
At the end of the year, the company had actually incurred the following:
Direct labor cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,220,000
Depreciation on manufacturing plant and equipment. . . .
$500,000
Property taxes on plant. . . . . . . . . . . . . . . . . . . . . . . . . .
$21,000
Sales salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$25,000
Delivery drivers' wages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$17,000
Plant janitors'…
The following information is available for Drake Company, which adjusts and closes its accounts every December 31:
1.
Salaries accrued but unpaid total $2,840 on December 31.
2.
The $247 December utility bill arrived on December 31 and has not been paid or recorded.
3.
Buildings with a cost of $78,000, 25-year life, and $9,000 residual value are to be depreciated; equipment with a cost of $44,000, 8-year life, and $2,000 residual value is also to be depreciated. The straight-line method is to be used.
4.
A count of supplies indicates that the Store Supplies account should be reduced by $128 and the Office Supplies account reduced by $397 for supplies used during the year.
5.
The company holds a $6,000, 12% (annual rate), 6-month note receivable dated September 30, from a customer. The interest is to be collected on the maturity date.
6.
Bad debts expense is estimated to be 1% of annual sales. Sales total $65,000.
7.
An analysis of the company insurance policies…
Chapter 27 Solutions
College Accounting, Chapters 1-27
Ch. 27 - Under the perpetual inventory system, Cost of...Ch. 27 - Prob. 2TFCh. 27 - On the spreadsheet, the factory overhead account...Ch. 27 - Prob. 4TFCh. 27 - The adjustment for factory overhead applied to...Ch. 27 - LO2 The adjustment for the amount of factory...Ch. 27 - The adjustment for depreciation expense for the...Ch. 27 - At the end of the accounting period, a credit...Ch. 27 - Prob. 4MCCh. 27 - Prob. 5MC
Ch. 27 - LO2 Prepare adjusting entries at December 31 for J...Ch. 27 - Prob. 2CECh. 27 - Prob. 3CECh. 27 - Prob. 1RQCh. 27 - Prob. 2RQCh. 27 - Prob. 3RQCh. 27 - Prob. 4RQCh. 27 - Prob. 5RQCh. 27 - What are the distinctive features of ToyJoys...Ch. 27 - Prob. 7RQCh. 27 - Prob. 8RQCh. 27 - Prob. 9RQCh. 27 - ADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR...Ch. 27 - Prob. 2SEACh. 27 - Prob. 3SEACh. 27 - CLOSING JOURNAL ENTRIES Prepare closing journal...Ch. 27 - REVERSING JOURNAL ENTRIES Prepare reversing...Ch. 27 - SPRE ADSHEET, ADJUSTING ENTRIES, AND FIN ANCIAL...Ch. 27 - FINANCIAL STATEMENTS The adjusted trial balance...Ch. 27 - ADJUSTING. CLOSING. AND REVERSING ENTRIES A...Ch. 27 - ADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR...Ch. 27 - Prob. 2SEBCh. 27 - ADJUSTING JOURNAL ENTRIES FOR A MANUFACTURING...Ch. 27 - Prob. 4SEBCh. 27 - REVERSING ENTRIES Prepare reversing journal...Ch. 27 - SPREADSHEET, ADJUSTING ENTRIES, AND FINANCIAL...Ch. 27 - FINANCIAL STATEMENTS The adjusted trial balance...Ch. 27 - Prob. 8SPBCh. 27 - Prob. 1MYWCh. 27 - Reese Manufacturing Company manufactures and sells...Ch. 27 - Drafts of the condensed income statement and...
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- ADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR UNDERAPPLIED/OVERAPPLIED FACTORY OVERHEAD Prepare the December 31 adjusting journal entries for Keiser Company. Data are as follows: (a) Factory overhead is applied at a rate of 80% of direct labor costs. At the end of the year, the direct labor costs associated with the jobs still in process totaled 7,000. (b) A physical count of factory supplies at the end of the year shows that 3,750 of factory supplies were used during the year. (c) A review of the insurance policy files shows that 4,360 of insurance on the factory building and equipment has expired. (d) Depreciation expense for the year on the factory building was 9,400 and on factory equipment was 11,600, a total of 21,000. (e) The factory overhead account has a debit balance of 146,700 and a credit balance of 143,200 [after recording adjustments (a) through (d)]. Use Cost of Goods Sold for this adjustment. Was factory overhead underapplied or overapplied for the year?arrow_forwardADJUSTING ENTRIES INCLUDING ADJUSTMENT FOR UNDERAPPLIED/OVERAPPLIED FACTORY OVERHEAD Prepare the December 31 adjusting journal entries for Evanoff Company. Data are as follows: (a) Factory overhead is applied at a rate of 60% of direct labor costs. At the end of the year, the direct labor costs associated with the jobs still in process totaled 8,000. (b) A physical count of factory supplies at the end of the year shows that 5,100 of factory supplies were used during the year. (c) A review of the insurance policy files shows that 6,500 of insurance on the factory building and equipment has expired. (d) Depreciation expense for the year on the factory building was 9,000 and on factory equipment was 13,500, a total of 22,500. (e) The factory overhead account has a debit balance of 187,600 and a credit balance of 189,500 [after recording adjustments (a) through (d)]. Use Cost of Goods Sold for this adjustment. Was factory overhead under- or overapplied for the year?arrow_forwardHousley Paints Co. had a remaining debit balance of $25,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in Process, Finished Goods, and Cost of Goods Sold. The year-end balances of these accounts, before adjustment, showed the following: Determine the prorated amount of the underapplied factory overhead that is chargeable to each of the accounts. Prepare the journal entry to close the debit balance in Under-and Overapplied Factory Overhead.arrow_forward
- Adjusting Entries The following information is available for Drake Company, which adjusts and closes its accounts every December 31: 1. Salaries accrued but unpaid total 2,840 on December 31. 2. The 247 December utility bill arrived on December 31 and has not been paid or recorded. 3. Buildings with a cost of 78,000, 25-year life, and 9,000 residual value are to be depreciated; equipment with a cost of 44,000, 8-year life, and 2,000 residual value is also to be depreciated. The straight linemethod is to be used. 4. A count of supplies indicates that the Store Supplies account should be reduced by 128 and the Office Supplies account reduced by 397 for supplies used during the year. 5. The company holds a 6,000, 12% (annual rate), 6 month note receivable dated September 30, from a customer. The interest is to be collected on the maturity date. 6. Bad debts expense is estimated to be 1% of annual sales. Sales total 65,000. 7. An analysis of the company insurance policies indicates that the Prepaid Insurance account is to be reduced for 528 of expired insurance. 8. A review of travel expense reports indicates that 310 has been paid for airfare for a salesperson (and recorded as Travel Expenses), but has not yet been used. 9. The income tax rate is 30% on current income and will be paid in the first quarter of next year. The pretax income of the company before adjustments is 18,270. Required: Journalize the necessary year-end adjusting entries for Drake. Show supporting calculations in your journal entry explanations.arrow_forwardDuring September of the current year, Reyes Company purchased P3,500,000 raw materials. During the month, Reyes incurred P2,040,000 direct labor cost and applied 80% of direct labor cost. During the same month, there were changes in inventories as follows: Increase in raw materials P100,000; Decrease in work in process P150,000 and decrease in finished goods P75,000. What is the amount of cost of goods sold? a.P7,147,000 b.P7,297,000 c.P6,922,000 d.P7,422,000arrow_forwardCarley products has no work in progress or finished goods at year end. The balances of Carley's accounts include the following. Cost of good sold $2,040,000 General and admin expenses 900,000 Sales 3,600,000 Manufacturing overhead control 700,000 Manufacturing overhead applied 648,000 Carley's pretax income for the year is... A. 608,000 B. 660,000 C. 712,000 D. 1,5087,000arrow_forward
- The following year-end information is taken from the December 31 adjusted trial balance and other records of Leone Company. Advertising expense $ 49,000 Depreciation expense—Office equipment 28,000 Depreciation expense—Selling equipment 29,000 Depreciation expense—Factory equipment 71,000 Raw materials purchases (all direct materials) 810,000 Maintenance expense—Factory equipment 42,300 Factory utilities 37,200 Direct labor 484,000 Indirect labor 73,000 Office salaries expense 44,000 Rent expense—Office space 26,000 Rent expense—Selling space 62,000 Rent expense—Factory building 149,000 Sales salaries expense 358,000 Use the following additional information for Leone Company Raw materials inventory, beginning $ 162,000 Raw materials inventory, ending 167,000 Work in process inventory, beginning 49,000 Sales 2,695,000 Work in process inventory, ending 53,000 Finished goods inventory, beginning 69,000 Finished goods inventory, ending…arrow_forwardThe following year-end information is taken from the December 31 adjusted trial balance and other records of Leone Company. Advertising expense $ 49,000 Depreciation expense—Office equipment 28,000 Depreciation expense—Selling equipment 29,000 Depreciation expense—Factory equipment 71,000 Raw materials purchases (all direct materials) 810,000 Maintenance expense—Factory equipment 42,300 Factory utilities 37,200 Direct labor 484,000 Indirect labor 73,000 Office salaries expense 44,000 Rent expense—Office space 26,000 Rent expense—Selling space 62,000 Rent expense—Factory building 149,000 Sales salaries expense 358,000 Identify each cost as either a product cost or a period cost. If a product cost, classify it as direct materials, direct labor, or factory overhead. If a period cost, classify it as a selling expense or a general and administrative expense.arrow_forwardThe following year-end information is taken from the December 31 adjusted trial balance and other records of Leone Company. Advertising expense $ 49,000 Depreciation expense—Office equipment 28,000 Depreciation expense—Selling equipment 29,000 Depreciation expense—Factory equipment 71,000 Raw materials purchases (all direct materials) 810,000 Maintenance expense—Factory equipment 42,300 Factory utilities 37,200 Direct labor 484,000 Indirect labor 73,000 Office salaries expense 44,000 Rent expense—Office space 26,000 Rent expense—Selling space 62,000 Rent expense—Factory building 149,000 Sales salaries expense 358,000 Use the following additional information for Leone Company Raw materials inventory, beginning $ 162,000 Raw materials inventory, ending 167,000 Work in process inventory, beginning 49,000 Sales 2,695,000 Work in process inventory, ending 53,000 Finished goods inventory, beginning 69,000 Finished goods inventory, ending…arrow_forward
- 2. Lakeshore Company allocates overhead using direct labour-hours. For 2020, the estimated and actual labour-hours were 182,000 and 168,000 respectively, and the predetermined overhead rate used to apply overhead for the year was $24.40 per direct labour-hour. The manufacturing overhead control T-account showed a credit balance of $184,600 at the end of the year, and this balance was disposed of at the end of the year by closing it to cost of goods sold. Required: 1. Was manufacturing overhead under- or overapplied? 2. Compute the actual overhead amount incurred over the year. 3. How will end-of-period disposal of this amount impact net income?arrow_forwardAssuming only Job# 2 and 3 were completed and sold, what is the cost of goods sold at year end? 523,700 468,075 484,700 394,700arrow_forwardAt the end of the year, overhead applied was $3,675,000. Actual overhead was $3,498,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to a.increase by $177,000 b.increase by $354,000 c.decrease by $354,000 d.decrease by $177,000arrow_forward
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