Certain transactions, such as those dealing with payroll, require detailed computational work before preparing the journal entry.

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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 Paid Hi-Foam Products Company $16,826.24 in payment of the December 31 balance.

3 Received a check from Calm Waters Board Corporation for the amount due (check AR schedule).

4 Paid Marine National Bank $45,733.48 for December payroll taxes payable as follows: Employees’ Income Tax Payable, $26,353.78; FICA Tax Payable, $17,928.88; Federal Unemployment Tax, $638.38; State Unemployment Tax, $812.44. Applied factory overhead to Job No. 1403 is based upon 130% of direct labor cost.(note this was 125% last December but the 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 SaltWaterHut.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. SaltWaterHut 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 the 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)

4 Paid $13,946.72 for Income Tax Payable. 4 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. Remember that employees are paid on the last day of each month.

9 Paid Anabella Henriquez, County Tax Collector, $12,642.00 for property taxes accrued as of December 31.

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 B1 (Beginner SUP) paddleboards for Rio Watersports. The promised date is February 14. The company began the job today, applying $11,828.00 of direct materials to Job No. 1406. (Materials 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 Applied $2,654.28 of direct materials to Job No. 1402. (Materials Requisition No. 1682)

12 Received a check from Go Paddle Sales Company for the amount due.

15 Applied $4,428.12 of direct materials to Job No. 1404. (Materials Requisition No. 1683)

16 Purchased $1,186.00 of factory supplies from Keys Supplies Inc. and paid cash.

16 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.

16 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 the finished goods inventory was $2,000.00.

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 of R1 (Racing 1) custom stand-up paddle (SUP) boards. The promised 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 Paid the sales manager of Hydro Paddle Boards, Inc. $567.24 for customer entertaining.

18 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.

18 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.

22 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 $4,936.20 of direct materials to Job No. 1408. (Materials Requisition No. 1686) 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) Applied factory overhead using the appropriate rate. Transferred the completed job to the finished goods account.

26 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 the appropriate rate. Transferred the completed job to the finished goods account.

29 Sold and shipped Job No. 1408 to the appropriate 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.

29 Paid D H2O Corp. the amount due in payment of the January 1 balance.

29 Received a check from HP SUP, Inc. for the amount due after the discount period has expired.

29 Paid Post Office $1,250.00 for postage added to a postage meter. Expense this amount.

29 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. © 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) Jan.

31 Paid all employees for wages earned in January. Applied factory overhead using the appropriate rate.

This job will not be completed until February.

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.................................... $22,440.00

Superintendent’s salary........... 6,200.00

Nonfactory: Sales salaries........................... 23,950.00

Officers’ salaries..................... 14,280.00

Office salaries......................... 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 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.

31 Record the employer payroll taxes for January. All payroll taxes related to factory personnel are debited to Factory Overhead; all payroll taxes related to nonfactory 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.

31 Received a check from SaltWaterHut.com for the amount due.

31 Received a check from Fiji Stand-Up Paddle Board Co. for the amount due.

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)................. $1,584.00 Office equipment........................ 799.40

31 Amortization of patents for January (debit Factory Overhead) $750.00 31 Property tax accrued for the month: Factory (debit Factory Overhead) $925.00 General....................................... 234.52

31 Closeout underapplied /overapplied Factory Overhead to Cost of Goods Sold.

31 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.