The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the...

 

 

  

 

 

 

 

 

 

 

 

 

  

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The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the first month of the company s fiscal year. Hydro Paddle Boards, Inc. is a manufacturing corporation that designs and manufactures a limited variety of custom stand-up paddle (SUP) boards. The SUP boards vary in size and performance, including beginner, intermediate, advanced, competition, and racing boards. Hydro Paddle Boards, Inc. maintains a job- order cost system. You have accepted a position with Hydro Paddle Boards, Inc. as assistant controller, and you will begin your duties on January 1 of the current year. In your review of the previous assistant controller s records, you notice some jobs were incomplete as of December 31 of the previous year. These jobs are contained in the Job Cost Records. You plan to complete most of these jobs in January and to accept new jobs from dealers and other builders. You are responsible for the daily accounting operations, preparation of interim financial statements, and end-of-month adjusting and closing entries. Hydro Paddle Boards, Inc. manufactures all products in a single production department. An individual job-order cost sheet is maintained for cach job. The job-order cost sheet contains accumulated costs for each job, including actual direct materials, actual direct labor, and applied factory overhead. Gross pay for direct labor is recorded by a debit to Work in Process Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of poufactur personnel are recorded at the end of each month by a debit to the appropriate salary expense accounts. Deductions for employees FICA and federal income taxes are recorded whenever gross pay is recorded, using the simplified rates of 89 (for FICA, including Medicare) and 15% (for federal income tax). All wages are paid on the last day of the month. All employer payroll taxes are recorded at the end of the month. Payroll taxes related to factory personnel are debited to Factory Overhead. Payroll taxes related to all other company personnel are debited to Payroll Taxes Expense General Hydro Paddle Boards, Inc. maintains two materials accounts, one for Direct Materials and one for Indirect Materials and Factory Supplies. Factory overhead is applied to each job based on 130% of direct labor cost for that job(was 125% in Dec). Hydro Paddle Boards, Inc. maintains only one factory overhead account. Remember that debits to Factory Overhead represent actual overhead and credits to Factory Overhead represent applied overhead. Since the difference between actual factory overhead and applied factory overhead is insignificant, the evetapplied or underapplied balance is closed out to Cost of Goods Sold as an adjusting entry at the end of each month. Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by 140% to determine the selling price for each job. Since Hydro Paddle Boards, Inc. sells to dealers, sales are exempt from state sales tax. All sales are on account and are subject to terms of 2/10, net 30 days, FOB shipping point. Sales to credit customers expected to take the discount are recorded at the discounted amount. Sales to credit customers who do not normally pay within the discount period are recorded at the gross amount. Since Hydro Paddle Boards, Inc. sells by custom order, it does not accept returns of merchandise. Accounts Payable is used solely for the purchase of direct materials and indirect materials and factory supplies. All vendors expect full payment within 30 days Operating expenses, ith the exception of any accrued salaries, payroll taxes, property taxes, and income taxes, are paid when incurred. All cash received is deposited in the bank, and all payments are made by check When dealing with an accounts receivable or accounts payable item, be sure to record the company name in the General Journal and post to the Accounts Receivable Ledger or Accounts Payable Ledger It is January 1, and you are ready to assume your new responsibilities Good luck! MANUAL INSTRUCTIONS 1. Journalize the entries for the month of January in the General Journal. When using the work in process account, be sure to post to the appropriate Job Cost Record. 2. Post the General Journal entries to the General Ledger Accounts provided (Allowance for Doubtful Accounts, Office Supplies, Factory Overhead, and Salaries Payable. Journalize and post the adjusting entries. 3 Note: Certain transactions, such as those dealing with payroll, require detailed computational work before preparing the journal entry. These transactions are explained initially in the narrative as they occur. Please refer to the original transaction when preparing a subsequent similar transaction. Jan. 2 Paid Salt Water Mall $8,200.00 for January rent. Of this amount, 35% is for office facilities and 65% is for factory facilities. 2 Paid RWT Advertising Agency $1200.00 for preparing advertisements in local newspapers. 3 NARRATIVE OF TRANSACTIONS 3 4 4 Paid Hi-Foam Products Company $16,826.24 in payment of the December 31 balance. 4 Paid Marine National Bank $45,733.48 for December payroll taxes payable as follows: Received a check from Calm Waters Board Corporation for the amount due (check AR schedule). Employees Income Tax Payable, $26,353.78; FICA Tax Payable, $17,928.88; Federal Unemployment Tax, $638.38; State Unemployment Tax, $812.44. Paid $13,946.72 for Income Tax Payable. Paid Coco PVC Company $21,428.00 in payment of the December 31 balance. 4 Applied $7,248.00 of direct materials (1679) and $16,240.00 of direct labor (Time Ticket No. 258) to Job No. 1403, which will complete the job. Use the simplified rates of 8% of gross pay for employees FICA tax and 15% of gross pay for employees federal income tax. When preparing the entry for applying direct labor, debit Work in Process for the gross pay, and credit - Employees Income Tax Payable and FICA Tax Payable for the appropriate amounts and Salaries Payable for net pay. Applied factory overhead to Job No. 1403 is based upon 130% of direct labor cost.(note this was 125% last December but company has a new rate this year)/ Jan. 4 Transferred the completed job to the finished goods account. 5 Sold and shipped Job No. 1403 to Salt WaterHut.com. All sales are on account 2/10, net 30 days, FOB shipping point. Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by 140% to determine the selling price. Salt WaterHut is not expected to pay within the discount period. Hydro Paddle Boards, Inc. maintains a perpetual inventory system. Each time a sale is made to a customer, you must debit Cost of Goods Sold and credit Finished Goods for the cost of the job. 8 Requisitioned $2,482.54 of indirect materials and factory supplies to be used in the manufacture of all jobs currently in process. (Materials Requisition No. 1680) Remember that employees are paid on the last day of each month. 9 Paid Anabella Henriquez, County $12,642.00 December 31. Tax Collector, for property taxes accrued as of 9 Purchased from GT Matrix Corporation $5,082.52 of indirect factory supplies, credit terms net 15 days. 9 Accepted a job for the manufacture of 66 units Bl (Beginner SUP) paddle boards for Rio Watersports. The promise date is February 14. The company began the job today, applying $11,828.00 direct materials to Job No. 1406. (Materials of Requisition No. 1681) 10 Received a check from Tarpon Sports Ltd. for the amount due. 11 Paid Light Hardware, Inc. $18,200.00 in payment of the December 31 balance. Jan. 11 12 15 16 16 16 Applied $2,654.28 of direct materials to Job No. 1402. (Materials Requisition No. 1682) Received a check from Go Paddle Sales Company for the amount due. Applied $4,428.12 of direct materials to Job No. 1404. (Materials Requisition No. 1683) Purchased $1,186.00 of factory supplies from Keys Supplies Inc. and paid cash. Applied $6,434.00 of direct labor to Job No. 1405, which will complete the job. (Time Ticket No. 260) Applied factory overhead using the appropriate rate. Transferred the completed job to the finished goods account. Sold one Standard C1 (Competition) custom stand-up paddle (SUP) board to a cash customer for $2,800.00. The cost of the goods shipped from finished goods inventory was $2,000.00. $4,936.20 of direct materials to Job No. 1408. (Materials Requisition No. 1686) END OF PART 1 17 Requisitioned $2,235.00 of indirect materials and factory supplies to be used in all factory jobs currently in process. (Materials Requisition No. 1684) 17 Signed a contract with Extreme Board Systems for the manufacture of 77 units R1 (Racing 1) custom stand-up paddle (SUP) boards. The promise date is February 15. The company began the job today, applying $8,440.000 of direct materials to Job No. 1407. (Materials Requisition No. 1685) 17 18 18 22 Paid the sales Boards, entertaining. Inc. manager of Hydro Paddle $567.24 for customer Received a report from the treasurer that Blue Runner Sports Dealers, one of our customers, has declared bankruptcy. Wrote off the balance owed to Hydro Paddle Boards, Inc. by Blue Runner Sports Dealers. Sold and shipped Job No. 1405 to the appropriate customer. Refer to that job s Cost Record for the total cost of the job to determine the selling price. The customer is not expected to pay within the discount period. Purchased $20,464.32 of direct materials from K.C. Epoxy Supply Company, credit terms net 30 days. 22 Accepted a job for the manufacture of 28 units R2 (Racing 2) custom stand-up paddle (SUP) boards for Four Oceanic Designers. The promise date is January 31. The company began the job today, applying Jan. 24. Paid GT Matrix Corporation the amount due today from the January 9 purchase. 25 Applied $3,320.00 of direct labor to Job No. 1402, which will complete the job. (Time Ticket No. 262) 26 Applied factory overhead using appropriate rate. 29 the Transferred the completed job to the finished goods account. Sold and shipped Job No. 1402 to the appropriate customer. Refer to that job s Cost Record for the total cost of the job to determine the selling price. Record the sale net of the 1% discount. 26 Applied $7,280.00 of direct labor to Job No. 1408, which will complete the job. (Time Ticket No. 264) Applied factory overhead using appropriate rate. the Transferred the completed job to the finished goods account. 29 29 29 29 customer. Refer to the Job Cost Record for the total cost of the job for billing purposes. Record the sale net of the 1% discount. Paid D H20 Corp. the amount due in payment of the January 1 balance. Received a check from HP SUP, Inc. for the amount due after the discount period has expired. Paid Post Office $1,250.00 for postage added to postage meter. Expense this amount. Paid Telephone Company $750.00 for January phone service. 29 Paid Island Signs & Advertising Company $2,640.00 for designing ads for our Internet website. 29 Paid Atlantic Power and Light Company $8,800.00 for heat, power, and light. Allocate 25% of this amount to Electricity Expense and 75% to Factory Overhead. 31 Applied $2,000.00 of direct labor to Job No. 1404. (Time Ticket No. 266) Applied factory overhead using the appropriate rate. This job will not be completed until February. 31 Applied $8,440.00 of direct labor to Job No. 1407. (Time Ticket No. 268) Applied factory overhead using the appropriate rate. This job will not be completed until March. Sold and shipped Job No. 1408 to the appropriate ©2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Jan. 31 Applied $2,320.00 of direct labor to Job No. 1406. (Time Ticket No. 270) 31 Received the following data on the monthly payroll from the payroll clerk: Direct labor (already recorded).. $46,034.00 New payroll data (to be recorded): Factory: Indirect.... Superintendent s salary.. Nonfactory: Sales salaries.. Officers salaries. Office salaries. 31 31 Applied factory overhead using the appropriate rate. This job will not be completed until February. 31 $22,440.00 6,200.00 23,950.00 14,280.00 12,620.25 Record the monthly payroll in the general journal. Remember that direct labor payroll already has been recorded as it was incurred in January. Salaries for indirect labor are i recorded only at the end of the month. Debit Factory Overhead for indirect labor and superintendent s salaries, debit other salary expense accounts for the appropriate amounts, credit FICA Tax Payable for 8% of gross pay, credit Employees Income Tax Payable for 15% of gross pay, and credit Salaries Payable for the net pay. Record the employer payroll taxes for January. All payroll taxes related to factory personnel are debited to Factory Overhead; all payroll taxes related to ponfactory personnel are debited to Payroll Taxes Expense General. Use a simplified FICA tax rate of 8% of gross pay, a state unemployment tax rate of 5.4%, and a federal unemployment tax rate of 0.8%. Since this is the first month in the current year, no employee has reached the ceilings on the payroll taxes. Use the form on page 46 (optional) to determine the amounts for the journal entry. Received a check from Salt WaterHut.com for the amount due. Received a check from Fiji Stand-Up Paddle Board Co. for the amount due. Jan. 31 Paid all employees for wages earned in January. 31 Purchased $16,928.00 of direct materials on account from Light Hardware, Inc. END OF PART 2 Adjusting Entries: Jan. 31 Insurance expired during January: Factory (debit Factory Overhead) $2,528.00 Selling. 112.50 General. 737.60 31 Office supplies inventory as of January 31, $2,900 31 Depreciation for the month: Factory equipment (debit Factory Overhead).. Office equipment...... 31 Amortization of patents for January (debit Factory Overhead) $750.00 31 Property tax accrued for the month: Factory (debit Factory Overhead) General. 31 $1,584.00 799.40 $925.00 234.52 31 Close out underapplied /overapplied Factory Overhead to Cost of Goods Sold. Based on past experience, Hydro Paddle Boards, Inc. estimates that $14,670.00 is a reasonable balance for the January 31 balance in the Allowance for Doubtful Accounts. 31 Income tax is based on 40% of income before tax. Accrue income tax owed by debiting Income Tax Expense and crediting Income Tax Payable for $16,750.11. Hydro Paddle Boards, Inc. Hydro Paddle Boards, Inc. Schedule of Accounts Receivable January 1, 20Y8 EXHIBITS Name -Aqua-Stream Paddle Board Company Blue Runner Sports Dealers.. Calm Waters Board Corporation.. Extreme Board Systems.. Fiji Stand-Up Paddle Board Co.. Go Paddle Sales Company. HP SUP, Inc.. Tarpon Sports Ltd. Total. Hydro Paddle Boards, Inc. Schedule of Accounts Payable January 1, 20Y8 Name Coco PVC Company... D H20 Corp. Hi-Foam Products Company. Light Hardware, Inc.. Total Balance 6,480.00 4,346.00 16,693.38 26,550.88 39,426.00 14,429.94 45,883.22 21,031.56 $174.840.98 Balance $21,428.00 37,244.00 16,826.24 18.200.00 $93.698.24 n re of li to VE bol 3 er General Ledger Assets (110-199) 110 Cash 111 112 121 122 123 124 Finished Goods 131 Prepaid Insurance 132 Office Supplies Current Assets Accounts Receivable Allowance for Doubtful Accounts Fixed Assets Factory Equipment Hydro Paddle Boards, Inc. Direct Materials Indirect Materials and Factory Supplies Work in Process CHART OF ACCOUNTS 161 162 Accumulated Depreciation-Factory 171 Organization Costs 172 Patents Equipment 163 Office Equipment 164 Accumulated Depreciation-Office Equipment Intangible Assets Liabilities (210-299) 210 Accounts Payable Salaries Payable 211 221 222 223 Employees Income Tax Payable FICA Tax Payable Federal Unemployment Tax Payable 224 State Unemployment Tax Payable 225 Property Tax Payable 226 Income Tax Payable Stockholders Equity (310-399) 310 Common Stock ($10 Par) 311 Paid-In Capital in Excess of Par-Common Stock 312 Retained Earnings 313 Income Summary Revenues (410-499) 410 Sales Expenses (501-599) 501 Cost of Goods Sold 511 Factory Overhead 512 Advertising Expense-Print 513 Advertising Expense-Internet Electricity Expense 514 515 Insurance Expense-Selling Insurance Expense-General 516 517 Sales Salaries Expense 518 519 520 521 522 523 524 525 526 527 528 599 Officers Salaries Expense Office Salaries Expense Depreciation Expense-Office Equipment Office Supplies Expense Payroll Taxes Expense-General Postage Expense-General Property Tax Expense Rent Expense-General Telephone Expense Travel and Entertainment Expense Uncollectible Accounts Expense Miscellaneous Expense Other Income and Expense (610-699) Interest Income 610 611 Other Income 612 Interest Expense 613 Other Expense Income Tax Expense 710 Income Tax Expense 1. Since you re doing only January just put in the day of the month in Date column. 2. Skip a line between journal entries 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 DAT E 19 20 21 22 23 24 25 26 27 28 29 GENERAL JOURNAL DESCRIPTION POS T DEBIT FAGE 1 CREDIT 22 24 25 27 RENARAHARA 19 4 5 6 78 11 1 2 3 14 15 12 13 10 ACCOUNT Allowance for Doubtful Accounts DAT E 20Y Jan 1 Balance ITEM ACCOUNT Supplies DATE ITEM Jan 1 Balance DATE ACCOUNT Factory Overhead ITEM PO ST. ✓ POS T GENERAL LEDGER PO ST. DEBIT DEBIT DEBIT CREDIT CREDIT CREDIT ACCOUNT NO. 112 BALANCE DEBIT ACCOUNT NO DEBIT 800 6 DEBIT BALANCE CREDIT 7340 132 CREDIT ACCOUNT NO. 511 BALANCE CREDIT ACCOUNT Salaries Payable DATE DAT E Dec Dec. ITEM DIRECT REQUISI TION PO ST. 1661 DEBIT JOB COST RECORD JOB NUMBER: 1402 DATE PROMISED: CUSTOMER NAME: Calm Waters Board Corporation DATE STARTED: JOB DESCRIPTION: 102 units 11 (Intermediate-SUP) DATE COMPLETED: AMOUN T $18.900 DIRECT LABOR TIME TICKET 244.24 AMOUN T CREDIT $26.520 DAT E Dec DEBIT FACTORY ACCOUNT NO. 211 RATE 125% of DL OVERALL COST SU DIRECT MATERIALS DIRECT LABOR FACTORY OVERHEAD BALANCE December January 29 CREDIT AMOUNT $33,150 MMARY DAT Dec. Dec DAT E Dec. Dec JOB NUMBER: 1403 JOB COST RECORD PROMISED: CUSTOMER NAME: SaltWaterHut.com DATE STARTED: JOB DESCRIPTION: 93 units BI (Beginner-SUP) DATE COMPLETED: DIRECT REQUISI AMOUN TION 1668 $17.472 JOB NUMBER: 1404 DIRECT REQUISIT ION 1672 AMOUN T $26.512 TIME TICKET DIRECT LABOR 248.25 TIME TICKET AMOUN 252 $14,920 DIRECT LABOR JOB COST RECORD DATE PROMISED: CUSTOMER NAME: Fiji Stand-Up Paddle Board Co. DATE STARTED: JOB DESCRIPTION: 94 units A1 (Advanced-SUP) DATE COMPLETED: AMOUN T DAT $12.280 Dec FACTORY OVERALL COST SU DIRECT MATERIALS DIRECT LABOR DAT E Dec. RATE 125% of DL FACTORY OVERHEAD OVERHEAD DATE 125% of DL MATERIALS DIRECT LABOR RATE OVERALL COST SUM DIRECT FACTORY OVERHEAD January 11 December FACTORY MMARY AMOUNT $18.650 February 5 December 19 AMOUNT $15.350. MARY I DAT E Dec. Dec. JOB NUMBER: 1405 DATE January 25 PROMISED: CUSTOMER NAME: A.J. Outfitters Company December 22 DATE STARTED: JOB DESCRIPTION: 75 units Advanced CI (Competition-SUP) DATE COMPLETED: FACTORY OVERHEAD DIRECT REQUISIT ION NUMBER 1677 JOB COST RECORD AMOUN T $21.030. DIRECT LABOR TIME TICKET NUMBER AMOUN T N 254,25 $25,060 DAT E Dec. RATE 125% of DL OVERALL COST SUM DIRECT MATERIALS. DIRECT LABOR OVERHEAD. FACTORY AMOUNT $31.325. MARY JOB COST RECORD DATE PROMISED: CUSTOMER NAME: Rio Watersports DATE STARTED: JOB DESCRIPTION: 66 units BI (Beginner-SUP) DATE COMPLETED: DAT JOB NUMBER: 1406 DIRECT DAT REQUISIT ION E AMOUN T DIRECT REQUISIT ION DIRECT LABOR TIME AMOU TICKET NT DIRECT LABOR DAT E TIME AMOUN TICKET AMOUN FACTORY JOB COST RECORD JOB NUMBER: 1407 PROMISED: CUSTOMER NAME: Extreme Board Systems DATE STARTED: JOB DESCRIPTION: 77 units RI (Racing 1-SUP) DATE COMPLETED: OVERALL COST SU DIRECT MATERIALS DIRECT LABOR DAT FACTORY OVERHEAD RATE FACTORY February 14 January 9 OVERALL COST SU DIRECT MATERIALS DIRECT LABOR RATE AMOUNT MMARY DATE February 15 January 17 FACTORY OVERHEAD AMOUNT MMARY DAT E JOB COST RECORD JOB NUMBER: 1408 DATE PROMISED: CUSTOMER NAME: Four Oceanic Designers DATE STARTED: JOB DESCRIPTION: 28 units R2 (Racing 2-SUP) DATE COMPLETED: DAT DIRECT REQUISI AMOUN TIO N T JOB NUMBER: CUSTOMER NAME: DIRECT REQUISI TIO N AMOUN DIRECT LABOR TIME TICKET AMOUN T TIME TICKET DIRECT LABOR DAT E JOB COST RECORD AMOUN OVERHEAD OVERALL COST SU DIRECT MATERIALS DIRECT LABOR FACTORY OVERHEAD RATE DAT STARTED: JOB DESCRIPTION: DATE COMPLETED: FACTORY DATE PROMISED: DATE January 31 January 22 RATE OVERALL COST SU DIRECT MATERIALS DIRECT LABOR FACTORY OVERHEAD AMOUNT MMARY AMOUNT MMARY The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the first month of the company s fiscal year. Hydro Paddle Boards, Inc. is a manufacturing corporation that designs and manufactures a limited variety of custom stand-up paddle (SUP) boards. The SUP boards vary in size and performance, including beginner, intermediate, advanced, competition, and racing boards. Hydro Paddle Boards, Inc. maintains a job- order cost system. You have accepted a position with Hydro Paddle Boards, Inc. as assistant controller, and you will begin your duties on January 1 of the current year. In your review of the previous assistant controller s records, you notice some jobs were incomplete as of December 31 of the previous year. These jobs are contained in the Job Cost Records. You plan to complete most of these jobs in January and to accept new jobs from dealers and other builders. You are responsible for the daily accounting operations, preparation of interim financial statements, and end-of-month adjusting and closing entries. Hydro Paddle Boards, Inc. manufactures all products in a single production department. An individual job-order cost sheet is maintained for cach job. The job-order cost sheet contains accumulated costs for each job, including actual direct materials, actual direct labor, and applied factory overhead. Gross pay for direct labor is recorded by a debit to Work in Process Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of poufactur personnel are recorded at the end of each month by a debit to the appropriate salary expense accounts. Deductions for employees FICA and federal income taxes are recorded whenever gross pay is recorded, using the simplified rates of 89 (for FICA, including Medicare) and 15% (for federal income tax). All wages are paid on the last day of the month. All employer payroll taxes are recorded at the end of the month. Payroll taxes related to factory personnel are debited to Factory Overhead. Payroll taxes related to all other company personnel are debited to Payroll Taxes Expense General Hydro Paddle Boards, Inc. maintains two materials accounts, one for Direct Materials and one for Indirect Materials and Factory Supplies. Factory overhead is applied to each job based on 130% of direct labor cost for that job(was 125% in Dec). Hydro Paddle Boards, Inc. maintains only one factory overhead account. Remember that debits to Factory Overhead represent actual overhead and credits to Factory Overhead represent applied overhead. Since the difference between actual factory overhead and applied factory overhead is insignificant, the evetapplied or underapplied balance is closed out to Cost of Goods Sold as an adjusting entry at the end of each month. Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by 140% to determine the selling price for each job. Since Hydro Paddle Boards, Inc. sells to dealers, sales are exempt from state sales tax. All sales are on account and are subject to terms of 2/10, net 30 days, FOB shipping point. Sales to credit customers expected to take the discount are recorded at the discounted amount. Sales to credit customers who do not normally pay within the discount period are recorded at the gross amount. Since Hydro Paddle Boards, Inc. sells by custom order, it does not accept returns of merchandise. Accounts Payable is used solely for the purchase of direct materials and indirect materials and factory supplies. All vendors expect full payment within 30 days Operating expenses, ith the exception of any accrued salaries, payroll taxes, property taxes, and income taxes, are paid when incurred. All cash received is deposited in the bank, and all payments are made by check When dealing with an accounts receivable or accounts payable item, be sure to record the company name in the General Journal and post to the Accounts Receivable Ledger or Accounts Payable Ledger It is January 1, and you are ready to assume your new responsibilities Good luck! MANUAL INSTRUCTIONS 1. Journalize the entries for the month of January in the General Journal. When using the work in process account, be sure to post to the appropriate Job Cost Record. 2. Post the General Journal entries to the General Ledger Accounts provided (Allowance for Doubtful Accounts, Office Supplies, Factory Overhead, and Salaries Payable. Journalize and post the adjusting entries. 3 Note: Certain transactions, such as those dealing with payroll, require detailed computational work before preparing the journal entry. These transactions are explained initially in the narrative as they occur. Please refer to the original transaction when preparing a subsequent similar transaction. Jan. 2 Paid Salt Water Mall $8,200.00 for January rent. Of this amount, 35% is for office facilities and 65% is for factory facilities. 2 Paid RWT Advertising Agency $1200.00 for preparing advertisements in local newspapers. 3 NARRATIVE OF TRANSACTIONS 3 4 4 Paid Hi-Foam Products Company $16,826.24 in payment of the December 31 balance. 4 Paid Marine National Bank $45,733.48 for December payroll taxes payable as follows: Received a check from Calm Waters Board Corporation for the amount due (check AR schedule). Employees Income Tax Payable, $26,353.78; FICA Tax Payable, $17,928.88; Federal Unemployment Tax, $638.38; State Unemployment Tax, $812.44. Paid $13,946.72 for Income Tax Payable. Paid Coco PVC Company $21,428.00 in payment of the December 31 balance. 4 Applied $7,248.00 of direct materials (1679) and $16,240.00 of direct labor (Time Ticket No. 258) to Job No. 1403, which will complete the job. Use the simplified rates of 8% of gross pay for employees FICA tax and 15% of gross pay for employees federal income tax. When preparing the entry for applying direct labor, debit Work in Process for the gross pay, and credit - Employees Income Tax Payable and FICA Tax Payable for the appropriate amounts and Salaries Payable for net pay. Applied factory overhead to Job No. 1403 is based upon 130% of direct labor cost.(note this was 125% last December but company has a new rate this year)/ Jan. 4 Transferred the completed job to the finished goods account. 5 Sold and shipped Job No. 1403 to Salt WaterHut.com. All sales are on account 2/10, net 30 days, FOB shipping point. Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by 140% to determine the selling price. Salt WaterHut is not expected to pay within the discount period. Hydro Paddle Boards, Inc. maintains a perpetual inventory system. Each time a sale is made to a customer, you must debit Cost of Goods Sold and credit Finished Goods for the cost of the job. 8 Requisitioned $2,482.54 of indirect materials and factory supplies to be used in the manufacture of all jobs currently in process. (Materials Requisition No. 1680) Remember that employees are paid on the last day of each month. 9 Paid Anabella Henriquez, County $12,642.00 December 31. Tax Collector, for property taxes accrued as of 9 Purchased from GT Matrix Corporation $5,082.52 of indirect factory supplies, credit terms net 15 days. 9 Accepted a job for the manufacture of 66 units Bl (Beginner SUP) paddle boards for Rio Watersports. The promise date is February 14. The company began the job today, applying $11,828.00 direct materials to Job No. 1406. (Materials of Requisition No. 1681) 10 Received a check from Tarpon Sports Ltd. for the amount due. 11 Paid Light Hardware, Inc. $18,200.00 in payment of the December 31 balance. Jan. 11 12 15 16 16 16 Applied $2,654.28 of direct materials to Job No. 1402. (Materials Requisition No. 1682) Received a check from Go Paddle Sales Company for the amount due. Applied $4,428.12 of direct materials to Job No. 1404. (Materials Requisition No. 1683) Purchased $1,186.00 of factory supplies from Keys Supplies Inc. and paid cash. Applied $6,434.00 of direct labor to Job No. 1405, which will complete the job. (Time Ticket No. 260) Applied factory overhead using the appropriate rate. Transferred the completed job to the finished goods account. Sold one Standard C1 (Competition) custom stand-up paddle (SUP) board to a cash customer for $2,800.00. The cost of the goods shipped from finished goods inventory was $2,000.00. $4,936.20 of direct materials to Job No. 1408. (Materials Requisition No. 1686) END OF PART 1 17 Requisitioned $2,235.00 of indirect materials and factory supplies to be used in all factory jobs currently in process. (Materials Requisition No. 1684) 17 Signed a contract with Extreme Board Systems for the manufacture of 77 units R1 (Racing 1) custom stand-up paddle (SUP) boards. The promise date is February 15. The company began the job today, applying $8,440.000 of direct materials to Job No. 1407. (Materials Requisition No. 1685) 17 18 18 22 Paid the sales Boards, entertaining. Inc. manager of Hydro Paddle $567.24 for customer Received a report from the treasurer that Blue Runner Sports Dealers, one of our customers, has declared bankruptcy. Wrote off the balance owed to Hydro Paddle Boards, Inc. by Blue Runner Sports Dealers. Sold and shipped Job No. 1405 to the appropriate customer. Refer to that job s Cost Record for the total cost of the job to determine the selling price. The customer is not expected to pay within the discount period. Purchased $20,464.32 of direct materials from K.C. Epoxy Supply Company, credit terms net 30 days. 22 Accepted a job for the manufacture of 28 units R2 (Racing 2) custom stand-up paddle (SUP) boards for Four Oceanic Designers. The promise date is January 31. The company began the job today, applying Jan. 24. Paid GT Matrix Corporation the amount due today from the January 9 purchase. 25 Applied $3,320.00 of direct labor to Job No. 1402, which will complete the job. (Time Ticket No. 262) 26 Applied factory overhead using appropriate rate. 29 the Transferred the completed job to the finished goods account. Sold and shipped Job No. 1402 to the appropriate customer. Refer to that job s Cost Record for the total cost of the job to determine the selling price. Record the sale net of the 1% discount. 26 Applied $7,280.00 of direct labor to Job No. 1408, which will complete the job. (Time Ticket No. 264) Applied factory overhead using appropriate rate. the Transferred the completed job to the finished goods account. 29 29 29 29 customer. Refer to the Job Cost Record for the total cost of the job for billing purposes. Record the sale net of the 1% discount. Paid D H20 Corp. the amount due in payment of the January 1 balance. Received a check from HP SUP, Inc. for the amount due after the discount period has expired. Paid Post Office $1,250.00 for postage added to postage meter. Expense this amount. Paid Telephone Company $750.00 for January phone service. 29 Paid Island Signs & Advertising Company $2,640.00 for designing ads for our Internet website. 29 Paid Atlantic Power and Light Company $8,800.00 for heat, power, and light. Allocate 25% of this amount to Electricity Expense and 75% to Factory Overhead. 31 Applied $2,000.00 of direct labor to Job No. 1404. (Time Ticket No. 266) Applied factory overhead using the appropriate rate. This job will not be completed until February. 31 Applied $8,440.00 of direct labor to Job No. 1407. (Time Ticket No. 268) Applied factory overhead using the appropriate rate. This job will not be completed until March. Sold and shipped Job No. 1408 to the appropriate ©2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Jan. 31 Applied $2,320.00 of direct labor to Job No. 1406. (Time Ticket No. 270) 31 Received the following data on the monthly payroll from the payroll clerk: Direct labor (already recorded).. $46,034.00 New payroll data (to be recorded): Factory: Indirect.... Superintendent s salary.. Nonfactory: Sales salaries.. Officers salaries. Office salaries. 31 31 Applied factory overhead using the appropriate rate. This job will not be completed until February. 31 $22,440.00 6,200.00 23,950.00 14,280.00 12,620.25 Record the monthly payroll in the general journal. Remember that direct labor payroll already has been recorded as it was incurred in January. Salaries for indirect labor are i recorded only at the end of the month. Debit Factory Overhead for indirect labor and superintendent s salaries, debit other salary expense accounts for the appropriate amounts, credit FICA Tax Payable for 8% of gross pay, credit Employees Income Tax Payable for 15% of gross pay, and credit Salaries Payable for the net pay. Record the employer payroll taxes for January. All payroll taxes related to factory personnel are debited to Factory Overhead; all payroll taxes related to ponfactory personnel are debited to Payroll Taxes Expense General. Use a simplified FICA tax rate of 8% of gross pay, a state unemployment tax rate of 5.4%, and a federal unemployment tax rate of 0.8%. Since this is the first month in the current year, no employee has reached the ceilings on the payroll taxes. Use the form on page 46 (optional) to determine the amounts for the journal entry. Received a check from Salt WaterHut.com for the amount due. Received a check from Fiji Stand-Up Paddle Board Co. for the amount due. Jan. 31 Paid all employees for wages earned in January. 31 Purchased $16,928.00 of direct materials on account from Light Hardware, Inc. END OF PART 2 Adjusting Entries: Jan. 31 Insurance expired during January: Factory (debit Factory Overhead) $2,528.00 Selling. 112.50 General. 737.60 31 Office supplies inventory as of January 31, $2,900 31 Depreciation for the month: Factory equipment (debit Factory Overhead).. Office equipment...... 31 Amortization of patents for January (debit Factory Overhead) $750.00 31 Property tax accrued for the month: Factory (debit Factory Overhead) General. 31 $1,584.00 799.40 $925.00 234.52 31 Close out underapplied /overapplied Factory Overhead to Cost of Goods Sold. Based on past experience, Hydro Paddle Boards, Inc. estimates that $14,670.00 is a reasonable balance for the January 31 balance in the Allowance for Doubtful Accounts. 31 Income tax is based on 40% of income before tax. Accrue income tax owed by debiting Income Tax Expense and crediting Income Tax Payable for $16,750.11. Hydro Paddle Boards, Inc. Hydro Paddle Boards, Inc. Schedule of Accounts Receivable January 1, 20Y8 EXHIBITS Name -Aqua-Stream Paddle Board Company Blue Runner Sports Dealers.. Calm Waters Board Corporation.. Extreme Board Systems.. Fiji Stand-Up Paddle Board Co.. Go Paddle Sales Company. HP SUP, Inc.. Tarpon Sports Ltd. Total. Hydro Paddle Boards, Inc. Schedule of Accounts Payable January 1, 20Y8 Name Coco PVC Company... D H20 Corp. Hi-Foam Products Company. Light Hardware, Inc.. Total Balance 6,480.00 4,346.00 16,693.38 26,550.88 39,426.00 14,429.94 45,883.22 21,031.56 $174.840.98 Balance $21,428.00 37,244.00 16,826.24 18.200.00 $93.698.24 n re of li to VE bol 3 er General Ledger Assets (110-199) 110 Cash 111 112 121 122 123 124 Finished Goods 131 Prepaid Insurance 132 Office Supplies Current Assets Accounts Receivable Allowance for Doubtful Accounts Fixed Assets Factory Equipment Hydro Paddle Boards, Inc. Direct Materials Indirect Materials and Factory Supplies Work in Process CHART OF ACCOUNTS 161 162 Accumulated Depreciation-Factory 171 Organization Costs 172 Patents Equipment 163 Office Equipment 164 Accumulated Depreciation-Office Equipment Intangible Assets Liabilities (210-299) 210 Accounts Payable Salaries Payable 211 221 222 223 Employees Income Tax Payable FICA Tax Payable Federal Unemployment Tax Payable 224 State Unemployment Tax Payable 225 Property Tax Payable 226 Income Tax Payable Stockholders Equity (310-399) 310 Common Stock ($10 Par) 311 Paid-In Capital in Excess of Par-Common Stock 312 Retained Earnings 313 Income Summary Revenues (410-499) 410 Sales Expenses (501-599) 501 Cost of Goods Sold 511 Factory Overhead 512 Advertising Expense-Print 513 Advertising Expense-Internet Electricity Expense 514 515 Insurance Expense-Selling Insurance Expense-General 516 517 Sales Salaries Expense 518 519 520 521 522 523 524 525 526 527 528 599 Officers Salaries Expense Office Salaries Expense Depreciation Expense-Office Equipment Office Supplies Expense Payroll Taxes Expense-General Postage Expense-General Property Tax Expense Rent Expense-General Telephone Expense Travel and Entertainment Expense Uncollectible Accounts Expense Miscellaneous Expense Other Income and Expense (610-699) Interest Income 610 611 Other Income 612 Interest Expense 613 Other Expense Income Tax Expense 710 Income Tax Expense 1. Since you re doing only January just put in the day of the month in Date column. 2. Skip a line between journal entries 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 DAT E 19 20 21 22 23 24 25 26 27 28 29 GENERAL JOURNAL DESCRIPTION POS T DEBIT FAGE 1 CREDIT 22 24 25 27 RENARAHARA 19 4 5 6 78 11 1 2 3 14 15 12 13 10 ACCOUNT Allowance for Doubtful Accounts DAT E 20Y Jan 1 Balance ITEM ACCOUNT Supplies DATE ITEM Jan 1 Balance DATE ACCOUNT Factory Overhead ITEM PO ST. ✓ POS T GENERAL LEDGER PO ST. DEBIT DEBIT DEBIT CREDIT CREDIT CREDIT ACCOUNT NO. 112 BALANCE DEBIT ACCOUNT NO DEBIT 800 6 DEBIT BALANCE CREDIT 7340 132 CREDIT ACCOUNT NO. 511 BALANCE CREDIT ACCOUNT Salaries Payable DATE DAT E Dec Dec. ITEM DIRECT REQUISI TION PO ST. 1661 DEBIT JOB COST RECORD JOB NUMBER: 1402 DATE PROMISED: CUSTOMER NAME: Calm Waters Board Corporation DATE STARTED: JOB DESCRIPTION: 102 units 11 (Intermediate-SUP) DATE COMPLETED: AMOUN T $18.900 DIRECT LABOR TIME TICKET 244.24 AMOUN T CREDIT $26.520 DAT E Dec DEBIT FACTORY ACCOUNT NO. 211 RATE 125% of DL OVERALL COST SU DIRECT MATERIALS DIRECT LABOR FACTORY OVERHEAD BALANCE December January 29 CREDIT AMOUNT $33,150 MMARY DAT Dec. Dec DAT E Dec. Dec JOB NUMBER: 1403 JOB COST RECORD PROMISED: CUSTOMER NAME: SaltWaterHut.com DATE STARTED: JOB DESCRIPTION: 93 units BI (Beginner-SUP) DATE COMPLETED: DIRECT REQUISI AMOUN TION 1668 $17.472 JOB NUMBER: 1404 DIRECT REQUISIT ION 1672 AMOUN T $26.512 TIME TICKET DIRECT LABOR 248.25 TIME TICKET AMOUN 252 $14,920 DIRECT LABOR JOB COST RECORD DATE PROMISED: CUSTOMER NAME: Fiji Stand-Up Paddle Board Co. DATE STARTED: JOB DESCRIPTION: 94 units A1 (Advanced-SUP) DATE COMPLETED: AMOUN T DAT $12.280 Dec FACTORY OVERALL COST SU DIRECT MATERIALS DIRECT LABOR DAT E Dec. RATE 125% of DL FACTORY OVERHEAD OVERHEAD DATE 125% of DL MATERIALS DIRECT LABOR RATE OVERALL COST SUM DIRECT FACTORY OVERHEAD January 11 December FACTORY MMARY AMOUNT $18.650 February 5 December 19 AMOUNT $15.350. MARY I DAT E Dec. Dec. JOB NUMBER: 1405 DATE January 25 PROMISED: CUSTOMER NAME: A.J. Outfitters Company December 22 DATE STARTED: JOB DESCRIPTION: 75 units Advanced CI (Competition-SUP) DATE COMPLETED: FACTORY OVERHEAD DIRECT REQUISIT ION NUMBER 1677 JOB COST RECORD AMOUN T $21.030. DIRECT LABOR TIME TICKET NUMBER AMOUN T N 254,25 $25,060 DAT E Dec. RATE 125% of DL OVERALL COST SUM DIRECT MATERIALS. DIRECT LABOR OVERHEAD. FACTORY AMOUNT $31.325. MARY JOB COST RECORD DATE PROMISED: CUSTOMER NAME: Rio Watersports DATE STARTED: JOB DESCRIPTION: 66 units BI (Beginner-SUP) DATE COMPLETED: DAT JOB NUMBER: 1406 DIRECT DAT REQUISIT ION E AMOUN T DIRECT REQUISIT ION DIRECT LABOR TIME AMOU TICKET NT DIRECT LABOR DAT E TIME AMOUN TICKET AMOUN FACTORY JOB COST RECORD JOB NUMBER: 1407 PROMISED: CUSTOMER NAME: Extreme Board Systems DATE STARTED: JOB DESCRIPTION: 77 units RI (Racing 1-SUP) DATE COMPLETED: OVERALL COST SU DIRECT MATERIALS DIRECT LABOR DAT FACTORY OVERHEAD RATE FACTORY February 14 January 9 OVERALL COST SU DIRECT MATERIALS DIRECT LABOR RATE AMOUNT MMARY DATE February 15 January 17 FACTORY OVERHEAD AMOUNT MMARY DAT E JOB COST RECORD JOB NUMBER: 1408 DATE PROMISED: CUSTOMER NAME: Four Oceanic Designers DATE STARTED: JOB DESCRIPTION: 28 units R2 (Racing 2-SUP) DATE COMPLETED: DAT DIRECT REQUISI AMOUN TIO N T JOB NUMBER: CUSTOMER NAME: DIRECT REQUISI TIO N AMOUN DIRECT LABOR TIME TICKET AMOUN T TIME TICKET DIRECT LABOR DAT E JOB COST RECORD AMOUN OVERHEAD OVERALL COST SU DIRECT MATERIALS DIRECT LABOR FACTORY OVERHEAD RATE DAT STARTED: JOB DESCRIPTION: DATE COMPLETED: FACTORY DATE PROMISED: DATE January 31 January 22 RATE OVERALL COST SU DIRECT MATERIALS DIRECT LABOR FACTORY OVERHEAD AMOUNT MMARY AMOUNT MMARY