Fuel used in heating a factory Paint used in the manufacture of jet skis …. Wages of an ironworker in the construction business Electricity used in lighting sales offices When direct materials and supplies are issued into production, Materials is credited, Work in Process is debited for the cost of the direct materials, and Factory Overhead is debited for the cost of indirect materials. When labor costs are distributed, the payroll account is credited, Work in Process is debited for the cost of direct labor, and Factory Overhead is debited for the cost of indirect labor.
Chapter 01 E Concluded As other costs related to manufacturing are incurred, the factory overhead account is debited. A debit to Work in Process for factory overhead is made to transfer overhead expenses to this account. At the same time, the factory overhead account is credited. The total cost of goods completed is recorded by debiting Finished Goods and crediting Work in Process. E Coral Park Production Co. Direct Materials: Inventory, January Finished goods inventory, January Chapter 01 E Phoenix Products Co.
Direct Materials: Inventory, October Finished goods inventory, October Chapter 01 E a. Direct materials used during the period Total manufacturing costs incurred during the period Cost of goods available for sale Work in Process Direct materials Work in Process Direct labor Factory Overhead Work in Process Finished Goods Accounts Receivable Work in Process— Jobs , , Cost of Goods Sold Year-to- Feb.
Merchandise inventory, April Finished goods, April Chapter 01 P 1. Merchandise inventory, Sept. Finished goods, Sept. Rochester Electronics, Inc. Chapter 01 P Continued 2. Chapter 01 P Concluded 3. Appleton Appliances, Ltd. Work in Process 41, — 12, Factory Overhead Depreciation of building Chapter 01 P Continued f. Accounts Payable Chapter 01 P Continued 3. Custer Products, Inc. Work in Process Materials Work in Process Labor Wages Payable Work in Process Factory Overhead Chapter 01 P Concluded Chapter 01 P Concluded 2.
Chapter 01 P Glasson Manufacturing Co. Chapter 01 P Concluded e. Added to work in process: Direct materials Added to finished goods Work in Process Jobs ,, Finished Goods Inventory Job Chapter 01 P Concluded 5. Potomac Automotive Co. The ethical standards which apply to this case are competency, integrity, and objectivity.
Competency requires that Branson perform her professional duties in accordance with relevant laws, regulations, and technical standards. Recording revenue in would be a violation of generally accepted accounting principles GAAP. This is the instructor Test Bank used by instructors and teachers to create tests and worksheets. Download it once and read it on your Kindle device, PC, phones or tablets.
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They are sold as irregular units, called seconds. Defective work also includes goods that are not first quality by the established standard but have imperfections that will be corrected, making them firstquality products. Safety stock required Carrying cost: 3, gals. Total order and carrying cost E Concluded b. E Work in Process Factory Overhead To record materials used during the month of June.
Accounts Payable Work in Process All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Material will be returned to vendor at its original purchase cost 2.
In a period of constantly rising prices as illustrated in the problem, the LIFO method of inventory pricing will result in the highest cost being charged to cost of goods sold; the FIFO method will result in the lowest cost being charged to cost of goods sold; and the weighted average method will result in a cost between the other two.
In a period of falling prices, the reverse will be true, with the weighted average method again falling in between the other two. E a. The FIFO method, which results in the most recent purchases being costed in ending inventory, indicates that materials costs have continued to increase over the three-year period, given that the number of units in inventory did not change.
FIFO would show the highest net income for The information given indicates that prices rose during the year. Using FIFO, the cost of goods sold would be charged with the oldest materials costs, which during a time of rising prices would be the lowest materials costs. LIFO would show the lowest net income for , because it would continue to charge the latest and highest costs to cost of goods sold while the other two methods would be less affected by the rising cost of the more recent purchases.
FIFO would show the highest net income for the three years combined, because it consistently charges the earliest, lower costs to the product, thereby increasing the yearly net income. Cengage AllLearning. Rights Reserved. All Rights May Reserved. Raw and In-Process Conversion Costs Various Credits Finished Goods Accounts Receivable Cost of Goods Sold Cost of Goods Sold………………………………………. Raw and In-Process………………………………….. Scrap Materials Factory Overhead Scrap Cash Scrap Materials No entry at the time scrap is identified At the time of sale: Accounts Receivable No entry at the time scrap is identified At the time of sale: Cash Scrap Revenue Spoiled Goods Inventory Note that when there is safety stock, the carrying cost does not equal the order cost at the EOQ.
P 1. P Order Size1 P Concluded 2. Annual requirement of 20, gallons divided by order size in column 1. Order size in column 1 divided by 2. Average number of gals. Weighted average Probably LIFO because it will come closer to matching current costs with current revenues. Other inventory factors that should be given consideration in selecting any method are: the dollar amount of the inventories; the magnitude of the price changes; the direction of the price changes, whether rising or falling; and the length of the inventory cycle.
Also, adopting LIFO in periods of rising prices will result in the minimization of income taxes. In a period of rising prices, the balance sheet inventory under either method will most likely be less than the current market prices.
However, as shown by the problem, the lowest figure for ending inventory will be reported when LIFO is used. Accounts payable Form used: materials requisitions. Ending Inventories: Materials Factory Overhead Inventory Short and Over …. Raw and In-Process…………………………………… Conversion Costs………………………………………. Factory Overhead Inventory Over and Short Factory Overhead Repairs and Maintenance Sales Returns and Allowances
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