Question

Creation Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014:
Costs incurred:
Purchases of direct materials (net) on credit...... $ 122,000
Direct manufacturing labor cost ........... 83,000
Indirect labor ................... 54,000
Depreciation, factory equipment ............ 32,000
Depreciation, office equipment ........... 7,900
Maintenance, factory equipment ........... 29,000
Miscellaneous factory overhead ........... 9,900
Rent, factory building .............. 78,000
Advertising expense ................ 94,000
Sales commissions ............... 33,000
Inventories:


Creation Co. uses a normal-costing system and allocates overhead to work in process at a rate of $ 2.60 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.

Required
1. Prepare journal entries to record the transactions for 2014 including an entry to close out over-or­underallocated overhead to cost of goods sold. For each journal entry indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry.
2. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, the Manufacturing Overhead Control Account, and the Manufacturing Overhead AllocatedAccount.


$1.99
Sales42
Views1937
Comments0
  • CreatedMay 14, 2014
  • Files Included
Post your question
5000