VOL Corp. manufactures parts for DVD players. The Trial Balance section of its worksheet and other year-end data follow.

INSTRUCTIONS
1. Prepare a 12-column manufacturing worksheet for the year ended December 31, 2016. Enter the trial balance in the first two columns.
2. Using the data given, enter the adjustments. Then complete the worksheet. Label all inventory adjustments as (a).
3. Prepare a statement of cost of goods manufactured.
4. Prepare an income statement.
5. Prepare a statement of retained earnings. Additional data needed is as follows:
a. Balance of Retained Earnings on January 1 was $603,300.
b. Dividends declared and paid on common stock during the year amounted to $110,000.
c. There were no changes in any other stockholders' equity accounts.
6. Prepare a balance sheet as of December 31, 2016. There are 110,000 shares of $1 par common stock outstanding, out of the 110,000 shares authorized.
7. Record the adjusting entries shown on the worksheet in general journal form. For each journal entry, use the letter that identifies the adjustment on the worksheet. Make a separate entry for each inventory adjustment. Do not give explanations.
8. Prepare the closing entries for all accounts involved in the cost of goods manufactured.
9. Prepare the closing entries for all revenue and expense accounts and the Manufacturing Summary account.
10. Prepare the closing entry to close the Income Summary account.
11. Journalize the reversing entries. Date the entries January 1, 2017.
YEAR-END DATA
a. Physical inventories taken on December 31, 2016, show $31,000 of raw materials on hand and $45,000 of finished goods on hand. The work in process inventory is estimated to be $48,000 on the same date.
b. It is estimated that 2 percent of the outstanding accounts receivable might not be collectible.
c. Of the prepaid insurance, $4,900 covering the factory building and equipment has expired.
d. A physical inventory discloses $4,400 of factory supplies on hand at the end of the period.
e. Depreciation expense for the year is as follows: $9,800 on the factory building, $9,800 on the factory machines, and $3,000 on the office furniture. (Make a compound entry.)
f. Payroll accruals at the end of the period include $3,500 of direct labor and $500 of indirect labor.
g. Payroll taxes on accrued wages are social security, 6.2 percent, and Medicare tax, 1.45 percent.
h. The income tax rate is 25 percent. (Round to nearest dollar).
Analyze:
Assume that the industry standard for direct labor costs is 20 percent of cost of goods manufactured. How is VOL Corp. performing as compared to this industry standard? Explain.

Transcribed Image Text:

VOL Corp. Trial Balance December 31, 2016 ACCOUNT NAME DEBIT CREDIT 01010100 0 Cash Accounts Receivable Allowance for Doubtful Accounts Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Prepaid Insurance Factory Supplies Land Factory Building Accumulated Depreciation-Factory Building 7 60000 0 10000 0 3 50000 0 5 0000 0 0 5 200000 70000o 50000o 010101010 0 3 0 00000 0 1 96000 0 Factory Machines Accumulated Depreciation-Factory Machines Office Furniture and Equipment Accumulated Depreciation-Office Furniture and 15 0000 0 0 1 96000 0 3 00000 0 |0|0|0 0 8 60000 0 Equipment Accounts Payable Salaries and Wages Payable Income Tax Payable Social Security lax Payable Medicare Tax Payable Employee Income lax Payable Common Stock Retained Earnings 1 1 00000 4 9 33000 0 10055000 Sales Returns and Allowances Materials Purchases Purchases Returns and Allowances Freight In Direct Labor Indirect Labor Payroll Taxes Expenses-Factory 65000 0 2 6 20000 0 oo0o 10000 0 1 9 100 00 0 3 00000 0 3 06000 0 9 00 00 0 34000o 300o Repairs and Maintenance-Factory Indirect Materials and Supplies Depreciation-Factory Building Depreciation-Factory Machines Insurance-Factory Sales Salaries Expense Payroll laxes Expense-Sales Delivery Expense Advertising Expense Uncollectible Accounts Expense Miscellaneous Selling Expense Officers' Salaries Expense Office Salaries Expense Payroll laxes Expense-Administrative Depreciation Expense-Office Furniture and 9 50000 0 500 0o Ơ!0101010 0 60000 0 기5101010 0 1 5 500 00 0 5 00000 0 1 95000 0 Equipment Other Administrative Expenses ncome lax Ơ!0101010 0 1 10000 0 Totals 17440000 0 1 7 4 40000