Barry Company produces custom bikes. There are no beginning raw material and work in process inventories. The transactions or events during the year are as follows: 1. Raw materials purchased were $88,000 in cash. 2. Labor cost was $44,000, of which $20,000 were traceable to different jobs and $24,000 were untraceable to the jobs. The labor cost was paid in cash. 3. $48,000 of raw materials were issued for production and traceable to different jobs. $2,000 of raw materials were used as tools. Managers determined that $2,000 of raw materials used as tools were immaterial and there was no point in tracing the amount of $2,000 to particular jobs. 4. Rent amounted to $60,000 in cash. 40% of the rent was used for the factory. 60% of the rent was used for the office. 5. Supervisor's salaries and factory cleaning were $20,000 and $10,000, respectively. The amounts were paid in cash. 6. During the year, the goods completed amounted to $120,000. 7. Barry Company uses direct labor hours as cost driver (allocation base) to allocate (apply) the manufacturing overhead. During the year, the estimated manufacturing overhead is $90,000 and the estimated direct labor hours are 10,000 hours. Barry used 15,000 hours during the year. 8. Barry Company sold the finished goods costing $100,000 at a selling price of $130,000 on account. Required: (a) Prepare journal entries to account for the transactions or events 1-8. (b) Prepare journal entries to account for any overapplied or underapplied manufacturing overhead written off to cost of goods sold.
Barry Company produces custom bikes. There are no beginning raw material and work in process inventories. The transactions or events during the year are as follows: 1. Raw materials purchased were $88,000 in cash. 2. Labor cost was $44,000, of which $20,000 were traceable to different jobs and $24,000 were untraceable to the jobs. The labor cost was paid in cash. 3. $48,000 of raw materials were issued for production and traceable to different jobs. $2,000 of raw materials were used as tools. Managers determined that $2,000 of raw materials used as tools were immaterial and there was no point in tracing the amount of $2,000 to particular jobs. 4. Rent amounted to $60,000 in cash. 40% of the rent was used for the factory. 60% of the rent was used for the office. 5. Supervisor's salaries and factory cleaning were $20,000 and $10,000, respectively. The amounts were paid in cash. 6. During the year, the goods completed amounted to $120,000. 7. Barry Company uses direct labor hours as cost driver (allocation base) to allocate (apply) the manufacturing overhead. During the year, the estimated manufacturing overhead is $90,000 and the estimated direct labor hours are 10,000 hours. Barry used 15,000 hours during the year. 8. Barry Company sold the finished goods costing $100,000 at a selling price of $130,000 on account. Required: (a) Prepare journal entries to account for the transactions or events 1-8. (b) Prepare journal entries to account for any overapplied or underapplied manufacturing overhead written off to cost of goods sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Barry Company produces custom bikes. There are no beginning raw material and work in
process inventories. The transactions or events during the year are as follows:
1. Raw materials purchased were $88,000 in cash.
2. Labor cost was $44,000, of which $20,000 were traceable to different jobs and $24,000 were
untraceable to the jobs. The labor cost was paid in cash.
3. $48,000 of raw materials were issued for production and traceable to different jobs. $2,000 of
raw materials were used as tools. Managers determined that $2,000 of raw materials used as
tools were immaterial and there was no point in tracing the amount of $2,000 to particular jobs.
4. Rent amounted to $60,000 in cash. 40% of the rent was used for the factory, 60% of the rent
was used for the office.
5. Supervisor's salaries and factory cleaning were $20,000 and $10,000, respectively. The
amounts were paid in cash.
6. During the year, the goods completed amounted to $120,000.
7. Barry Company uses direct labor hours as cost driver (allocation base) to allocate (apply) the
manufacturing overhead. During the year, the estimated manufacturing overhead is $90,000 and
the estimated direct labor hours are 10,000 hours. Barry used 15,000 hours during the year.
8. Barry Company sold the finished goods costing $100.000 at a selling price of $130,000 on
account.
Required:
(a) Prepare journal entries to account for the transactions or events 1-8.
(b) Prepare journal entries to account for any overapplied or underapplied
manufacturing overhead written off to cost of goods sold.
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