JLBV Ltd. manufactures and installs custom shelving for industrial warehouses. The company uses a specialized manufacturing...

  

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JLBV Ltd. manufactures and installs custom shelving for industrial warehouses. The company uses a specialized manufacturing process to ensure the shelves are an exact match with the building specification. The company uses a job order costing system to apply manufacturing overhead on the basis of direct labour cost. The company estimates that during the next year, it will incur $70,000 in overhead costs and will pay $140,000 in direct labour costs. During the year, the following transactions occurred: a.) Purchased $180,000 of direct materials on account. b.) Purchased $5,000 of supplies on account. (The supplies consisted of glue and cleaning supplies.) c.) Requisitioned $170,000 of direct materials and $4,500 of supplies for use in production. d.) Incurred employee costs: i. Direct labour ii. Indirect labour $150,000 40,000 iii. Administrative salaries 190,000 iv. Sales salaries 30,000 90,000 v. Sales commissions e.) Advertised on local television: $5,000 f.) Rent: $12,000. 40% of the space related to sales offices, 60% was a shop used in production of roofing materials. g.) Depreciation: $25,000. 70% relates to roofing equipment, 30% relates to office equipment. h.) Insurance expired: $15,000. 90% relates to the factory, the remainder relates to insurance on the office equipment. i.) Manufacturing overhead costs were applied to production. j.) Goods costing $375,000 were completed. k.) The company had sales on account of $800,000. According to cost data, the jobs cost $350,000. Required: a.) For items a.) to k.) above, record the journal entries. Unless otherwise noted, assume all transactions were on account. b.) Was overhead overapplied or underapplied for the period? If so, by how much? c.) Record any journal entry to close overhead to cost of goods sold. d.) Based on the information above, prepare an income statement for the company - assume a 20% tax rate. JLBV Ltd. manufactures and installs custom shelving for industrial warehouses. The company uses a specialized manufacturing process to ensure the shelves are an exact match with the building specification. The company uses a job order costing system to apply manufacturing overhead on the basis of direct labour cost. The company estimates that during the next year, it will incur $70,000 in overhead costs and will pay $140,000 in direct labour costs. During the year, the following transactions occurred: a.) Purchased $180,000 of direct materials on account. b.) Purchased $5,000 of supplies on account. (The supplies consisted of glue and cleaning supplies.) c.) Requisitioned $170,000 of direct materials and $4,500 of supplies for use in production. d.) Incurred employee costs: i. Direct labour ii. Indirect labour $150,000 40,000 iii. Administrative salaries 190,000 iv. Sales salaries 30,000 90,000 v. Sales commissions e.) Advertised on local television: $5,000 f.) Rent: $12,000. 40% of the space related to sales offices, 60% was a shop used in production of roofing materials. g.) Depreciation: $25,000. 70% relates to roofing equipment, 30% relates to office equipment. h.) Insurance expired: $15,000. 90% relates to the factory, the remainder relates to insurance on the office equipment. i.) Manufacturing overhead costs were applied to production. j.) Goods costing $375,000 were completed. k.) The company had sales on account of $800,000. According to cost data, the jobs cost $350,000. Required: a.) For items a.) to k.) above, record the journal entries. Unless otherwise noted, assume all transactions were on account. b.) Was overhead overapplied or underapplied for the period? If so, by how much? c.) Record any journal entry to close overhead to cost of goods sold. d.) Based on the information above, prepare an income statement for the company - assume a 20% tax rate.

Answer rating: 100% (QA)

Here are the journal entries for the transactions a Dr Materials inventory 180000 Cr Accounts payable 180000 b Dr Supplies inventory 5000 Cr Accounts ... View the full answer