Posted: September 16th, 2017
HOWIE STARS_Cost Accounting
Howie Stars produces stars for elementary teachers to reward their students. Howie Stars’ trial balance on June 1 follows:
HOWIE STARS
Trial Balance
June 1, 2014
Balance
Account Title Debit Credit
Cash $ 14,000
Accounts Receivable 155,000
Inventories:
Raw Materials 5,700
Work-in-Process 39,400
Finished Goods 20,400
Plant Assets 200,000
Accumulated Depreciation $ 72,000
Accounts Payable 127,000
Wages Payable 1,700
Common Stock 142,000
Retained Earnings 91,800
Sales Revenue
Cost of Goods Sold
Manufacturing Overhead
Selling and Administrative Expenses
Totals $ 434,500 $ 434,500
June 1 balances in the subsidiary ledgers were as follows:
– Raw Materials Inventory subsidiary ledger: Paper, $4,700; indirect materials, $1,000
– Work-in-Process Inventory subsidiary ledger: Job 120, $39,4000; Job 121, $0
– Finished Goods Inventory subsidiary ledger: Large Stars, $9,400; Small Stars, $11,000
June transactions are summarized as follows:
a. Collection on account, $152,000
b. Selling and administrative expenses incurred and paid, $28,000
c. Payments on account, $36,000
d. Materials purchases on account: Paper, $22,900; indirect materials, $3,800
e. Materials requisitioned and used in production:
Job 120: Paper; $850
Job 121: Paper, $7,650
Indirect materials, $1,000
f. Wages incurred during June, $35,000. Labor time records for the month: Job 120, $3,500; Job 121: $ 16,600; indirect labor, $ 14,900.
g. Wages paid in June include the balance in Wages Payable at May 31 plus $ 32,200 of wages incurred during June.
h. Depreciation on plant and equipment, $ 2, 600
i. Manufacturing overhead allocated at the predetermined overhead allocation rate of 50% of direct labor cost.
j. Jobs completed during the month: Job 120, 300,000 Large Stars at a total cost of $ 45,500
k. Sales on account: all of Job 120 for $ 111,000.
l. Adjusted for overallocated or underallocated manufacturing overhead.
Requirements:
1.) Journalize the transactions for the company.
2.) Open T-accounts for the general ledger, the Raw Materials Inventory subsidiary ledger, the Work-in-Process Inventory subsidiary ledger, and the Finished Goods Inventory subsidiary ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T-accounts using the transaction letters as a reference.
3.) Prepare a trial balance at June 30, 2014.
4.) Use the Work-in-Process Inventory T-account to prepare a schedule of cost of goods manufactured for the month of June.
5.) Prepare an income statement for the month of June.
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