Question

COMPUTE DIRECT LABOR BASED ON THE FOLLOWING:

FACTORY SUPERVISOR=$1,000ASSEMBLY LINE WORKERS=$2,000 AND OFFICE SALARIES=$5,000

COMPUTE DIRECT MATERIALS USED BASED ON THE FOLLOWING:

BEG RM=$1,000BEG

WIP=$2,000BEG FG=$3,000

END RM=$4,000

END WIP=$5,000

END FG=$6,000

RM PURCHASED=$7,000

COMPUTE COST OF GOODS MANUFACTURED BASED ON THE FOLLOWING:

DL=8,000

BEG WIP=2,000

BEG FG=3,000

MO=9,000

END WIP=5,000

END FG=6,000

DM USED =7,000

COMPUTE MANUFACTURING OVERHEAD:

FACTORY RENT=1,000

FACTORY UTILITIES=2,000

OFFICE DEPRECIATION=4,000

PREPARE THE JOURNAL ENTRY TO RECORD 5,000 RM PURCHASED ON ACCOUNT

BASED ON 8 ABOVE, 3,000 OF RM WAS REQUESTED FOR PRODUCTION, 2,000 FOR SPECIFIC JOBS AND 1,000 FOR GENERAL USE

PREPARE THE JOURNAL ENTRY TO RECORD $6,000 FACTORY PAYROLL. 5,000 PAID TO EMPLOYEES AND 1,000 TO TAXES PAYABLE.

BASED ON 10. ABOVE, 4,000 IS FOR ASSEMBLY LINE WORKERS AND 2,000 IS FOR THE FACTORY SUPERVISOR.

PREPARE THE JOURNAL ENTRY TO RECORD THE DECLARATION OF A 10% STOCK DIVIDEND. THERE ARE 100,000 COMMON SHARES OUTSTANDING, PAR VALUE OF THE STOCK IS $3/SH AND THE SELLING PRICE OF THE STOCK IS $105/SH

ABC COMPANY PURCHASED 1,000 SHARES OF ITS COMMON STOCK FOR ITS TREASURY. PAR VALUE IS $3/SH AND THE SELLING PRICE OF THE STOCK IS $105/SH.

PREPARE THE JOURNAL ENTRY TO RECORD ABC CORPORATION CLOSING OUT ITS NET INCOME OF $300,000

ABC COMPANY PAID $1,000 TO ITS ATTORNEY TO INCORPORATE ITS BUSINESS. PREPARE THE JOURNAL ENTRY.

PREPARE THE JOURNAL ENTRY TO RECORD THE ISSUANCE OF $300,000 BONDS FOR 103

Answer 1

1.

Direct labor = $2,000 (Assembly line workers)

2.

Direct material used:

Beginning raw material	$1,000
Raw material purchased	7,000
Less: Ending raw material	4,000
Direct material used	$4,000

3.

Cost of goods manufactured:

Direct material used	$7,000
Direct labor	8,000
Manufacturing overhead	9,000
Total manufacturing cost	24,000
Add: Beginning work in process	2,000
Less: Ending work in process	5,000
Cost of goods manufactured	$21,000

4.

Manufacturing overhead = Factory rent + Factory utilities

Manufacturing overhead = $1,000+2,000 = $3,000