Mighty Stars produces stars for elementary teachers to reward their students. Mighty Stars' trial balance on June 1 follows:

MIGHTY STARS

Trial Balance

June 1, 2018

June 1 balances in the subsidiary ledgers were as follows:
• Raw Materials Inventory subsidiary ledger: Paper, $4,000; indirect materials, $2,000
• Work-in-Process Inventory subsidiary ledger: Job 120, $40,000; Job 121, $0
• Finished Goods Inventory subsidiary ledger: Large Stars, $9,900; Small Stars, $10,500
June transactions are summarized as follows:
a. Collections on account, $145,000.
b. Selling and administrative expenses incurred and paid, $32,000.
c. Payments on account, $39,000.
d. Materials purchases on account: Paper, $24,000; indirect materials, $4,200.
e. Materials requisitioned and used in production:
Job 120: Paper, $950
Job 121: Paper, $7,900
Indirect materials, $1,200
f. Wages incurred during June, $39,000. Labor time records for the month: Job 120, $3,600; Job 121, $17,000; indirect labor, $18,400.
g. Wages paid in June include the balance in Wages Payable at May 31 plus $36,100 of wages incurred during June.
h. Depreciation on plant and equipment, $2,500.
i. Manufacturing overhead allocated at the predetermined overhead allocation rate of 80% of direct labor costs.
j. Jobs completed during the month: Job 120 with 700,000 Large Stars at a total cost of $47,430.
k. Sales on account: all of Job 120 for $104,000.
l. Adjusted for over allocated or under allocated manufacturing overhead.

Requirements
1. Journalize the transactions for the company.
2. Open T-accounts for the general ledger, the Raw Materials Inventory subsidiary ledger, the Work-in-Process Inventory subsidiary ledger, and the Finished Goods Inventory subsidiary ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T-accounts using the transaction letters as a reference.
3. Prepare a trial balance at June 30, 2018.
4. Use the Work-in-Process Inventory T-account to prepare a schedule of cost of goods manufactured for the month of June.
5. Prepare an income statement for the month of June?

Transcribed Image Text:

Balance Account Title Debit Credit $ 14,000 Cash Accounts Receivable 160,000 Inventories: 6,000 Raw Materials Work-in-Process 40,000 Finished Goods 20,400 220,000 Property, Plant, and Equipment $ 75,000 Accumulated Depreciation 134,000 Accounts Payable Wages Payable 2,600 Common Stock 139,000 Retained Earnings 109,800 Sales Revenue Cost of Goods Sold Manufacturing Overhead Selling and Administrative Expenses $ 460,400 $ 460,400 Totals