Case Study - Manufacturing Accounting - 10 [PDF]

Zitiervorschau

Case: Basic Cost System; Journal Entries; Financial Statements Lone Star Manufacturing Co. The post-closing trial balance of Lone Star Manufacturing Co. at September 30 is reproduced as follows. Lone Star Manufacturing Co. Post-Closing Trial Balance September 30, 2011 Cash 15,000 Accounts Receivable 18,000 Finished Goods 25,000 Work in Process 4,000 Materials 8,000 Building 156,000 Accumulated Depreciation—Building 23,400 Factory Equipment 108,000 Accumulated Depreciation—Factory Equipment 54,000 Office Equipment 12,000 Accumulated Depreciation—Office Equipment 2,000 Accounts Payable 30,000 Capital Stock 175,000 Retained Earnings 8 61,600 346,000 346,000 During the month of October, the following transactions took place: a. Raw materials at a cost of $50,000 and general factory supplies costing $8,000 were purchased on account. (Materials and supplies are recorded in the materials account.) b. Raw materials to be used in production costing $41,000 and miscellaneous factory supplies costing $5,500 were issued. c. Wages and salaries incurred and paid for the month were as follows:  Factory wages $34,000, (including $2,500 indirect labor),  Selling and administrative salaries, $5,000. (Ignore payroll withholdings and deductions.) d. Depreciation was recorded for the month at an annual rate of 5% on the building and 20% on the factory equipment and office equipment. The sales and administrative staff uses approximately one-fifth of the building for its offices. e. During the month, various other expenses totaling $5,200 were incurred on account. The company has determined that one-fourth of this amount is allocable to the office function. f. Total factory overhead costs were transferred to Work in Process. g. During the month, goods with a total cost of $79,000 were completed and transferred to the finished goods storeroom.

h. Sales for the month totaled $128,000 for goods costing $87,000 to manufacture. (Assume that all sales were made on account.) i. Accounts receivable in the amount of $105,000 were collected. j. Accounts payable totaling $55,000 were paid.

Required: 1. Prepare journal entries to record the transactions. 2. Set up T-accounts for all accounts listed in the September 30, 2011, Post-Closing Trial Balance and for Cost of Goods Sold, Factory Overhead, Selling and Administrative Expenses, Sales, and Wages Payable. Post the beginning trial balance and the journal entries prepared in Part 1 to the accounts and calculate the balances in the accounts on October 31. 3. Prepare a statement of cost of goods manufactured, an income statement, and a balance sheet. Notification: 

A temporary account, Factory Overhead, will be used to record all of the indirect materials, indirect labor, and other manufacturing expenses for the period.