Question

Exercise 3-31 Manufacturing Cost Flows (LO 3-2, 3-5, 3-6) [The following information applies to the questions displayed below.] Reimel Furniture Company, Inc., incurred the following costs during 20x2. Raw material used $ 172,000 Direct labor 322,000 During 20x2, manufacturing overhead of $170,000 was applied to production. Products costing $121,000 were finished, and products costing $132,000 were sold on account for $195,000. There were no purchases of raw material during the year. The beginning balances in the firm’s inventory accounts are as follows: Raw material $ 226,000 Work in process 16,000 Finished goods 32,000 Exercise 3-31 Part 1 Required: 1. Prepare T-accounts to show the flow of costs through the company’s manufacturing accounts during 20x2.

Answer 1

Answer:

1.) Dr Work in process 172000

              Cr  Material              172000

    (Raw material used)

2.) Dr Work in process 322000

             Cr   Wages payable                    322000

      ( Record direct labor used)

3.) Dr Work in process 170000

              Cr  Applied factory overhead  170000

       ( To record applied factory overhead)

4. Dr Finished goods 121000

             Cr Work in process    121000

      ( To record finished goods)

5.  a)Dr Cost of goods sold  132000

                       Cr Finished goods      132000

     b)  Dr  Account receivable    195000

                     Cr sales revenue                195000  

Explanation:

T-account

     Raw material                                                         Work in process                

Dr___________Cr_                                                 DR ___________CR

226000---                                                                  16000     -----

                  ---- 172000                                                72000

54000(bal)                                                                  322000

                                                                                    170000  ----- 121000

                               

Wages payable                                                         Factory overhead

Dr____________Cr                                               DR ___________Cr

           ---    322000

Applied factory overhead                                              Finished goods

Dr ____________Cr                                               Dr _____________Cr

           ----    170000                                                      32000 ---132000

                                                                                       121000 ---    

 Cost of goods sold                                                    Sales revenue

Dr ____________Cr                                               Dr _____________Cr

132000      ----                                                                     ---195000

                                                                                             ---

 Account receiable                                                    

Dr ____________Cr                                          

   195000  ----