FISHER COMPANY SOLUTIONS (Revised 9/26/08))
1.
Journal entries:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Raw Materials .....................................................
Accounts Payable ....................................
60,000
Work in Process .................................................
Manufacturing Overhead ...................................
Raw Materials ...........................................
50,000
2,000
Work in Process ................................................
Manufacturing Overhead ...................................
Salaries and Wages Payable ...................
60,000
15,000
Manufacturing Overhead ..................................
Cash .........................................................
40,000
Manufacturing Overhead ..................................
Property Taxes Payable ..........................
13,000
Manufacturing Overhead ..................................
Prepaid Insurance ....................................
7,000
Manufacturing Overhead ..................................
Accumulated Depreciation ......................
18,000
Work in Process ................................................
Manufacturing Overhead .........................
90,000
60,000
52,000
75,000
40,000
13,000
7,000
18,000
90,000*
Predetermined overhead rate = Budgeted manufacturing overhead = 1,200,000
Budgeted machine hours
200,000
= $6/MH
*Applied manufacturing overhead = 15,000 machine hours$6 per MH.
(i)
Salaries Expense ..............................................
Salaries and Wages Payable ................
30,000
30,000
(j)
(k)
(l)
(m)
(n)
2.
Depreciation Expense .......................................
Accumulated Depreciation .....................
7,000
Advertising Expense .........................................
Cash ….. ..................................................
42,000
Other Selling and Administrative Expense .....
Cash…. ....................................................
8,000
Finished Goods .................................................
Work in Process ......................................
158,000
Accounts Receivable ........................................
Sales ........................................................
225,000
Cost of Goods Sold ...........................................
Finished Goods .......................................
118,500
7,000
42,000
8,000
158,000
225,000
118,500
T-accounts and posting of journal entries:
Bal
(n)
Bal.
Accounts Receivable
XXX
225,000
Prepaid Insurance
7,000
XXX
Salaries and Wages Payable
Bal.
75,000
30,000
Accounts Payable
XXX
60,000
(f)
Raw Materials
Bal.
52,000
7,000
(a)
60,000
Bal.
15,000
Bal
(a)
(b)
Sales
XXX
(c)
(i)
225,000 (n)
Bal.
(b)
(c)
(h)
Bal.
Work in Process
158,000
30,000
50,000
60,000
90,000
72,000
Property Taxes Payable
XXX
13,000
Finished Goods
10,000
158,000
118,500
49,500
Bal.
(m)
Bal.
Accumulated Depreciation
XXX
18,000
7,000
(m)
Bal.
(e)
Bal
Cost of Goods Sold
(n) 118,500
Depreciation Expense
(j)
7,000
(n)
Bal.
(g)
(j)
Other Selling & Admin Expense
(l)
8,000
Cash
XXX 40,000
42,000
8,000
Manufacturing Overhead
(b)
2,000
90,000
(c)
15,000
(d)
40,000
(e)
13,000
(f)
7,000
(g)
18,000
Bal.
5,000
Advertising Expense
(k)
42,000
Salaries Expense
(i)
30,000
(d)
(k)
(l)
(h)
3.
(a)
Calculation of actual overhead:
Indirect material ......................................................................
Indirect Labor .........................................................................
Depreciation: factory building and equipment ......................
Rent: factory equipment .........................................................
Utilities ......................................................................................
Property taxes ..........................................................................
Insurance ..................................................................................
Miscellaneous Factory Costs .................................................
Total actual overhead ..............................................................
(b)
Underapplied
overhead
$
2,000
15,000
18,000
16,000
21,000
13,000
7,000
3,000
$95,000
 actual manufacturing   applied manufacturing 
  

= 
overhead
overhead

 

= $95,000 – $90,000*
= $5,000 underapplied
*$90,000 = 15,000 direct-labor hours$6 per hour.
(c)
Cost of Goods Sold
5,000
Manufacturing Overhead ..............................................
5,000
4.
FISHER COMPANY
SCHEDULE OF COST OF GOODS MANUFACTURED
FOR THE MONTH OF APRIL
Direct material:
Raw-material inventory, April 1 ...............................
$7,000
Add: Purchases of raw material ..............................
60,000
Raw material available for use ................................
$67,000
Deduct: Raw-material inventory, April 30 ..............
15,000
Raw material used ....................................................
$ 52,000
Less: Indirect materials included in
manufacturing overhead ........................................
2,000
Direct labor ......................................................................
Manufacturing overhead:
Indirect material ............................................................... $ 2,000
Indirect Labor ..................................................................
15,000
Depreciation: factory building and equipment ...............
18,000
Rent: factory equipment .................................................
16,000
Utilities ..............................................................................
21,000
Property taxes ...................................................................
13,000
Insurance...........................................................................
7,000
Miscellaneous Factory Costs .........................................
3,000
Total actual manufacturing overhead .............
95,000
Less: Underapplied overhead .........................
(5,000)
Overhead applied to work in process ...................
Total manufacturing costs ..............................................
Add: Work-in-process inventory, April 1 .......................
Subtotal ............................................................................
Deduct: Work-in-process inventory, April 30 ................
Cost of goods manufactured ..........................................
†Cost
of Job A, which was completed during April.
$50,000
60,000
90,000
$ 200,000
30,000
$230,000
72,000
$ 158,000†
5.
FISHER COMPANY
SCHEDULE OF COST OF GOODS SOLD
FOR THE MONTH OF APRIL
Finished-goods inventory, April 1 ............................................................
Add: Cost of goods manufactured ...........................................................
Cost of goods available for sale ...............................................................
Deduct: Finished-goods inventory, April 30............................................
Cost of goods sold ....................................................................................
Add: Underapplied overhead* ..................................................................
Cost of goods sold (adjusted for overapplied overhead) .......................
$10,000
158,000
$168,000
49,500
$ 118,500
5,000
$ 123,500*
*The company closes underapplied or overapplied overhead into cost of goods sold.
Hence the balance in underapplied overhead is added to cost of goods sold for the
month.
6.
FISHER COMPANY
INCOME STATEMENT
FOR THE MONTH OF APRIL
Sales revenue ............................................................................................
Less: Cost of goods sold .........................................................................
Gross margin .............................................................................................
Less: Selling and administrative expenses ............................................
Salaries Expense .............................................................................
30,000
Depreciation Expense .....................................................................
7,000
Advertising Expense .......................................................................
42,000
Other Expense .................................................................................
8,000
Income (loss) .............................................................................................
$225,000
123,500
$101,500
$
87,000
14,500