ACG 3401 Chapter Notes - Chapter 6: Human Resource Management, General Ledger, Paymaster

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chocolateleopard236

17 Feb 2019

School

University of Florida

Department

Accounting

Course

ACG 3401

Professor

Christopher W Falk

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Document Summary

The personnel department prepares and submits personnel action forms to the prepare payroll function. These documents identify employees authorized to receive a paycheck and are used to reflect changes in hourly pay rates, payroll deductions, and job classifications. Production employees prepare two types of time records: job tickets to capture the time that individual workers spend on each production job, time cards to capture the time that the employee is at work. Time cars are the formal record of daily attendance. At the end of the week, the supervisor reviews, signs, and sends the time cards to the payroll department. After cost accounting allocates labor costs to the wip accounts, the charges are summarized in a labor distribution summary and forwarded to the general ledger function. To prevent ghost employees getting paid, many companies use a paymaster to distribute the paychecks to employees. This individual is independent of the payroll process.

Related Questions

45) Internal Control Questionnaire Items: Possible Error or Fraud Due to Weakness. Refer to the internal control questionnaire for the production cycle (Appendix Exhibit 9A.1) and assume that the answer to each question is ânoâ Prepare a table matching questions to errors of frauds that could occur because of the absence of the control. Your column headings should be as follows:

Occurrence Yes /No Comments

1) Is cost accounting separate from production, payroll, and inventory control?

2) Is access to blank production order forms restricted to authorized persons?

3) Is access to blank bills of materials and labor requisitions restricted to authorized persons?

4) Is access to blank material requisitions forms restricted to authorized persons?

5) Are production orders prepared by authorized persons?

6) Are bills of materials and labor needs prepared by authorized persons?

7) Are material usage reports compared to job time tickets?

8) Are labor usage reports compared to job time tickets?

9) Are material requisitions and job time tickets reviewed by the production supervisor after the floor supervisor prepares them?

10) Are the weekly direct labor and materials used by the production supervisor after preparation by the floor supervisor?

Completeness

1) Are production orders prenumbered and the numerical sequence checked for missing documents?

2) Are bills of materials and labor needs forms prenumbered and the numerical sequence checked for missing documents?
3) Are materials requisitions and job time tickets prenumbered and the numerical sequence checked for missing documents?

4) Are inventory issue forms prenumbered and the numerical sequence checked for missing documents?

5) Is an accounting notified of terms on purchases agreements

6) Is accounting notified of orders received on consignment?

Accuracy

1) Are difference between inventory issue forms and materials used reports recorded and reported to the costs accounting supervisor?

2) Are differences between job time tickets and the labor report recorded and reported to the cost accounting supervisor?

3) Are standard costs used? If so, are they reviewed and revised periodically?

4) Are reports materials issued to production reconciled with finished goods reports?

Cutoff

1) Does the accounting manual give instructions to date entries on the date of use?

2) Does an accounting supervisor review monthly, quarterly, and year-end costs accruals?

Classification

1) Are summary entries reviewed and approved by the cost accounting supervisor

2) Does the accounting manual give instructions for proper classification of cost accounting transactions?

taupeant891

Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.

Each knitter has a knitting machine that is used about 2/3 of the knitterâs time, the rest of the knitterâs time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.

The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.

Required:

Review the data in the Predetermined Factory Overhead Rate panel, and compute the predetermined factory overhead rate for POGP Company.

On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition panel.

A.	Journalize the entry to record the addition of the materials to Work in Process.*
B.	On the Job Cost Sheets panel, add the materials to the Job Cost Sheet for Job 83.

On December 15, review the source documents on the Time Tickets panel.

A.	Journalize the entry to record the addition of direct labor to Work in Process for the period December 1 through December 15.*
B.	Journalize the entry to record the addition of factory overhead to Work in Process for the period December 1 through December 15.*
C.	On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 62 for the period December 1 through December 15.

On December 21, Job 62 is completed. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Finished Goods account.*

On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions*:

A.	The entry to record the sale.
B.	The entry to record the transfer of costs from Finished Goods to Cost of Goods Sold.

On December 31, the last work day of the year for the knitters, review the source documents on the Time Tickets panel.

A.	Journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31.*
B.	Journalize the entry to record the addition of factory overhead to Work in Process for the period December 16 through December 31.*
C.	On the Job Cost Sheets panel, add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job 83 for the period December 16 through December 31.

On December 31, journalize the following transactions*. Note that expenses (B), (C), and (D) were paid in cash.

A.	One monthâs depreciation on equipment
B.	One monthâs payroll for all employees
C.	One monthâs rent of $1,500
D.	One monthâs utilities of $1,275

On December 31, prepare the journal entry to dispose of the balance in the Factory Overhead account.*

What are the balances in the following accounts as of December 31?

A.	Materials
B.	Work in Process
C.	Finished Goods
D.	Factory Overhead
E.	Cost of Goods Sold
	* Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS

POGP Company

General Ledger

	ASSETS
110	Cash
112	Accounts Receivable
117	Supplies
118	Materials
119	Work in Process
120	Finished Goods
125	Equipment
126	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
211	Wages Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends
313	Income Summary

	REVENUE
410	Sales

	EXPENSES
510	Cost of Goods Sold
520	Factory Overhead
525	Wages Expense

POGP Company

UNADJUSTED TRIAL BALANCE

November 30, 20Y8

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	20,000.00
2	Accounts Receivable	1,000.00
3	Supplies	200.00
4	Materials	5,000.00
5	Work in Process	5,404.00
6	Equipment	12,000.00
7	Accumulated Depreciation-Equipment		825.00
8	Accounts Payable		150.00
9	Common Stock		10,000.00
10	Retained Earnings		12,000.00
11	Dividends	18,096.00
12	Sales		307,500.00
13	Cost of Goods Sold	255,040.00
14	Factory Overhead		15.00
15	Wages Expense	13,750.00
16	Totals	330,490.00	330,490.00

Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).

Estimated Selected Amounts for the Year
Estimated depreciation on equipment	$1,200.00
Estimated total Office Manager/Knitting Supervisor wages	$30,000.00
Estimated office utilities	$6,000.00
Estimated factory utilities	$4,800.00
Estimated factory rent	$18,000.00

Activity Base Data
Estimated number of DLH for the year	5,000
Estimated number of MH for the year	3,500

Calculate the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.

Materials Requisition			Date: Dec. 10
Req. No. 12255	Job No. 83
Description	Qty. Issued	Unit Price	Amount
Yarn type B	700 skeins	$5.00	$3,500
		Total issued	$3,500

Time Ticket	No. 1255	Name:	Susan Blake
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	65	$15.00	$975.00
12/16-12/31	83	103	$15.00	$1,545.00
			Total Cost	$2,520.00

Time Ticket	No. 2274	Name:	Josh Porter
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	75	$15.00	$1,125.00
12/16-12/31	83	88	$15.00	$1,320.00
			Total Cost	$2,445.00

Time Ticket	No. 3923	Name:	Mary Jones
Work Description:	Knitting/piecing
Dates	Job No.	Hours Worked	Unit Price	Amount
12/01-12/15	62	60	$15.00	$900.00
12/16-12/31	83	109	$15.00	$1,635.00
			Total Cost	$2,535.00

Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriate areas of the following job cost sheets. If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.

Job 62	100 units:	Sweaters
	Direct Materials	Direct Labor	Factory Overhead	Total
Balance Dec. 1	$5,000	$300	$104	$5,404
Dec. 15
Total Cost
			Unit Cost

Job 83	200 units:	Sweater vests
	Direct Materials	Direct Labor	Factory Overhead	Total Job Cost
Balance Dec. 1	$0	$0	$0	$0
Dec. 10
Dec. 31
Total Cost

Journalize the entries in requirements 2 - 8. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 15

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

What are the balances in the following accounts as of December 31?

Materials
Work in Process
Finished Goods
Factory Overhead
Cost of Goods Sold

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ACG 3401 Chapter Notes - Chapter 6: Human Resource Management, General Ledger, Paymaster

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