ACCT 2101 Chapter Notes - Chapter 7: Financial Statement, Net Income, Weighted Arithmetic Mean

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lemonclam298

24 Dec 2017

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Chapter 7: reporting and interpreting cost of goods. Nature of inventory and cost of goods sold. Inventory: tangible property held for sale in business or used to produce goods or services for sale. Merchandise inventory are goods that are ready for sale without any further processing. Raw materials inventory: items acquired for processing into finished goods. Work in process inventory: goods in the process of being manufactured. Finished goods inventory: manufactured goods that are ready for sale. Inventory cost includes everything involved with bringing an article to usable or salable condition. Subtract purchase returns and allowances or purchase discounts. Goods sold from inventory --> cost of goods sold is increased, merchandise inventory is decreased. Raw materials used --> work in process inventory increases. Direct labor + factory overhead --> work in process inventory increases. Manufactured goods --> work in process inventory decreases, finished goods increased ds decreases, finished goods increased.

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Zachary Modems, Inc. acquired a subsidiary named Anywhere, Inc. (AI). AI manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary:


Cash	$	184,600
Raw materials inventory		3,680
Work in process inventory		5,530
Finished goods inventory		6,450
Common stock			$	119,060
Retained earnings				81,200
Totals	$	200,260	$	200,260

The subsidiary completed the following transactions during 2017:

1. Paid $55,380 cash for direct raw materials.

2. Transferred $46,160 of direct raw materials to work in process.

3. Paid production employees $73,860 cash.

4. Applied $48,910 of manufacturing overhead costs to work in process.

5. Completed work on products that cost $150,410.

6. Sold products that cost $131,950 for $167,950 cash. Record the recognition of revenue in a row labeled 6a and the cost of goods sold in a row labeled 6b.

7. Paid $18,450 cash for selling and administrative expenses.

8. Actual overhead costs paid in cash amounted to $50,710.

9. Closed the Manufacturing Overhead account. The amount of over- or underapplied overhead was insignificant (immaterial).

10. Made a $4,580 cash distribution to the owners

REQUIRED

A. Prepare a schedule of cost of goods manufactured and sold.

ANYWHERE, INC.
Schedule of Cost of Goods Manufactured and Sold
For Year Ended December, 31 2017
Beginning raw materials inventory
Purchases
Raw materials available for use	0
Ending raw materials inventory
Direct raw materials used	0
Direct labor
Manufacturing overhead
Total manufacturing costs	0
Beginning work in process inventory
Total work in process inventory	0
Ending work in process inventory
Cost of goods manufactured	0
Beginning finished goods inventory
Cost of goods available for sale	0
Ending finished goods inventory
Cost of goods sold	$0

coffeegoose683

1.) When products held in inventory are sold:

A.)Cost of Goods Sold is credited.

B.)Work in Process Inventory is credited.

C.)Finished Goods Inventory is credited.

D.)Finished Goods Inventory is debited.

2.)Since manufacturing costs (direct materials, direct labor,and overhead) are incurred in the process of manufacturing units ofproduct, these costs are credited t

A.)	The Direct Materials Inventory, Direct Labor, and ManufacturingOverhead accounts respectively.
B.)	Liability accounts.
C.)	The Work in Process Inventory account.
D.)	The Cost of Goods Sold account.

3.)Management accounting systems are designed to assistorganizations in the performance of all of the following functionsexcept:

A.)	The assignment of decision-making authority over companyassets.
B.)	Planning and decision-making.
C.)	Monitoring, evaluating, and rewarding performance.
D.)	The preparation of income tax returns.

4.)In a schedule of cost of finished goods manufactured, thefigure for total manufacturing costs:

	A.) May be less than the cost of direct materials used.
	B.) May be less than the direct labor costs assigned toproduction.
	C.) May be less than the manufacturing overhead applied toproduction.
	D.) May be less than the cost of finished goodsmanufactured.

5.) When a manufacturing company purchases raw materials orcomponent parts to be used in manufacturing finished goods, thesecosts are initially debited to:

	A.) Expense accounts.
	B.) Raw Materials Inventory.
	C.) Finished Goods Inventory.
	D.) Manufacturing Overhead.

6.) The wages paid to employees working directly on a company'sproducts would be shown as a:

	A.) Credit to Direct Labor.
	B.) Debit to Direct Labor.
	C.) Credit to Work in Process.
	D.) Debit to Manufacturing Overhead.

7.) Amounts credited to the Work in Process inventory accountmay best be described as:

	A.) The cost of finished goods manufactured.
	B.) Total manufacturing costs charged to production.
	C.) The cost of goods sold.
	D.) Direct materials purchased, direct labor costs paid, andpayments for items classified as manufacturing overhead.

chocolatetiger413

Statement of Cost of Goods Manufactured for a ManufacturingCompany

A payment of cash (or a commitment to pay cash in the future)for the purpose of generating revenues.Cost data for SanduskyManufacturing Company for the month ended January 31 are asfollows:

Inventories	January 1	January 31
Materials	$175,500	$154,440
Work in process	121,100	106,560
Finished goods	91,260	103,470

Direct labor		$315,900
Materials purchased during January		336,960
Factory overhead incurred during January:
	Indirect labor	33,700
	Machinery depreciation	20,360
	Heat, light, and power	7,020
	Supplies	5,620
	Property taxes	4,910
	Miscellaneous costs	9,130

a. Prepare a cost of goods manufacturedstatement for January.

Sandusky Manufacturing Company
Statement of Cost of Goods Manufactured
For the Month Ended January 31
Indirect laborMachinery depreciationSuppliesWork in processinventory, January 1			$
Direct materials:
Machinery depreciationMaterials inventory, January1SuppliesWork in process inventory, January 31	$
Indirect laborProperty taxesPurchasesWork in process inventory,January 31
Cost of materials available for useLess work in processinventory, January 31SuppliesWork in process inventory, January31	$
Indirect laborMaterials inventory, January 31MiscellaneouscostWork in process inventory, January 31
Cost of direct materials used in productionLess work in processinventory, January 31Materials inventory, January 1Totalmanufacturing costs		$
Direct laborIndirect laborMachinery depreciationSupplies
Factory overhead:
Indirect laborMaterials inventory, January 1Materialsinventory, January 31Purchases	$
Direct laborMachinery depreciationPurchasesWork in processinventory, January 31
Direct laborHeat, light, and powerMaterials inventory, January1Work in process inventory, January 31
Direct laborMaterials inventory, January1PurchasesSupplies
Materials inventory, January 31Property taxesPurchasesWork inprocess inventory, January 31
Direct materialsMiscellaneous costsPurchasesWork in processinventory, January 31
Total factory overhead
Total manufacturing costs incurred during January
Total manufacturing costs			$
Cost of materials available for useDirect materialsMaterialsinventory, January 31Work in process inventory, January 31
Cost of goods manufactured			$

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b. Determine the The cost of finished goodsavailable for sale minus the ending finished goods inventory.costof goods sold for January.

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ACCT 2101 Chapter Notes - Chapter 7: Financial Statement, Net Income, Weighted Arithmetic Mean

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