Question

1. Creation Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014:

Costs incurred:

Purchases of direct materials (net) on credit

$122,000

Direct manufacturing labor cost

83,000

Indirect labor

54,000

Depreciation, factory equipment

32,000

Depreciation, office equipment

7,900

Maintenance, factory equipment

29,000

Miscellaneous, factory overhead

9,900

Rent, factory building

78,000

Advertising expense

94,000

Sales commissions

33,000

Inventories:

January 1, 2014

December 31, 2014

Direct materials

$9,800

$13,000

Work in process

6,300

23,000

Finished goods

68,000

27,000

Creation Co. uses a normal-costing system and allocates overhead to work in process at a rate of $2.60 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.

A. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, the Manufacturing Overhead Control A

Answer 1

RAW MATERIAL INVENTORY
Balance		9,800	Work in Process		118,800
Accounts payable		122,000
march31, Balance		13,000
MANUFACTURING OVERHEADS
Factory wages		54,000	Work In process		215,800
Cash (Rent& maintenance)		116,900
Acc. Depreciation		32,000
			Balance		12,900
WORK IN PROCESS INVENTORY
Balance		6,300	Finished Goods		282,100
Factory wages		83,000
Manufacturing OH		215,800
Balance		23,000
FINISHED GOODS INVENTORY
Balance		68,000	Cost of Goods sold		323,100
work in Process		282,100
Balance		27,000
COST OF GOODS SOLD
Finished Goods Inv		323,100
Balance		323,100