Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:

Morrison Company
Balance Sheet
January 1
Assets
Cash				$	41,400
Raw materials	$	15,200
Work in process		5,300
Finished goods		24,750			45,250
Prepaid expenses					2,450
Property, plant, and equipment (net)					131,000
Total assets				$	220,100
Liabilities and Stockholders’ Equity
Accounts payable				$	11,700
Retained earnings					208,400
Total liabilities and stockholders’ equity				$	220,100

During January the company completed the following transactions:

1. Purchased raw materials on account, $77,800.
2. Raw materials used in production, $91,000 ($78,800 was direct materials and $12,200 was indirect materials).
3. Paid $184,400 of salaries and wages in cash ($111,200 was direct labor, $35,400 was indirect labor, and $37,800 was related to employees responsible for selling and administration).
4. Various manufacturing overhead costs incurred (on account) to support production, $46,650.
5. Depreciation recorded on property, plant, and equipment, $66,400 (70% related to manufacturing equipment and 30% related to assets that support selling and administration).
6. Various selling expenses paid in cash, $41,900.
7. Prepaid insurance expired during the month, $1,350 (80% related to production, and 20% related to selling and administration).
8. Manufacturing overhead applied to production, $132,200.
9. Cost of goods manufactured, $288,600.
10. Cash sales to customers, $395,000.
11. Cost of goods sold (unadjusted), $285,000.
12. Cash payments to creditors, $79,600.
13. Underapplied or overapplied overhead  $?  .

Required:

1. Calculate the ending balances that would be reported on the company's balance sheet on January 31^st. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.)

2. What is Morrison Company’s net operating income for the month of January?

Answer rating: 100% (QA)

Part1 Cash Raw Maaterial WIP Finished Goods Manufacturing Overhead Prepaid Ex... View the full answer