Problem 15-3B Computing and recording job costs; preparing income statement and balance sheet P1 P2 P3 P4 Cavallo Mfg.'s computer system generated the following account balances on December 31. The company's manager knows that this list of balances is wrong because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Notes payable Common stock. Retained earnings (prior year) Sales Cost of goods sold Factory overhead General and administrative expenses Totals Debit $ 64,000 42,000 26,000 0 9,000 3,000 105,000 27,000 45,000 $321,000 Credit $ 10,500 13,500 30,000 87,000 180,000 $321,000 a 2/15/23, 11:59 AM roblem Set B These six documents must be processed to bring the accounting records up to date. Labor time ticket 66: $8,000 direct labor to Job 604 Labor time ticket 77: $3,000 indirect labor Materials requisition 31: $4,600 direct materials to Job 603 Materials requisition 32: $7,600 direct materials to Job 604 Materials requisition 33: $2,100 indirect materials Labor time ticket 65: $5,000 direct labor to Job 603 Jobs 603 and 604 are the only jobs in process at year-end. The predetermined overhead rate is 200% of direct labor cost. Required 1. Use the document information above to prepare journal entries for the following costs. a. Direct materials. b. Direct labor. c. Overhead applied. d. Indirect materials. e. Indirect labor. 2. Set up a Factory Overhead T-account and enter amounts from part 1 related to factory overhead. Determine the amount of over- or underapplied overhead. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold. 3. Prepare a revised list of account balances as of December 31. Hint: Use the prior year's Retained Earnings balance of $87,000. 4. Prepare an income statement for the year and a balance sheet as of December 31. Hint: Retained earnings is $110,900 at the end of the current year. Check (4) Net income, $23,900 5. Assume that the $2,100 indirect materials on materials requisition 33 should have been direct materials charged to Job 604. Does this error result in overstatement or understatement of total assets on the balance sheet at December 31? Date

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Cavallo Mfg.'s computer system generated the following acoount balances on December 31 . The company's manaser knowes that this list of balances is wroag because it does not show any balance for Woek in Process Inveatory, and the accrued factory payroll (Factory Wages Payable) has not beea recorded. a These six documents nast be processed to bring the accounting records up to date. Jobs 60s and 604 are the only jobs in process at year-end. The predetermined overthead rate is zooks of direct laboe cost. Required 1. Use the document information above to prepare journal entries for the following costs. a. Direet materials. b. Direct Laboe, c. Owerbead applied. d. Indirect materials. e. Indirect labor: 2. Set up a Factory Owrhead T-account and eater amourits trome part 1 related to factocy overhead. De-termine the amenamt of esver- of underapplied overhead. Prepare the entry to close any over- or anderapplied overhead to Cost of Coocks Sold. 3- Prepare a revised list of account balances as of Decormber 31. Hint: Use the prior year's Retained Farmings balance of 58%,000. 4. Prepare an income statement for the yoar and a balance shect as of December 31. Mint: Retained earnings is snogoo at the end of the eurreat year. 5. Assume that the $2,100 indirect materials as materials requinition 33 should have bees direct materials charped to Job 6oy Does this errar result in overstatement or understatement of tokal avsets on the balanee sheet at December 31 ? Cavallo Mfg.'s computer system generated the following acoount balances on December 3i. The company's manaser knowes that this list of balances is wrong because it does not show any balance for Work in Proess Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. a awn ueas. These six doeuments mast be peocessed to bring the accounting records up to date. Jobs 60g and 604 are the only johs in process at year-end. The predetermined overhead rate is zook of direct laboe cost. Required 1. Use the document information above to prepare journal entries for the following costs. a. Direct materials. b. Direct Labos, c. Owerlsead applied. d. Indirect materials. e. Indirect labor. 2. Set up a Factory Owerhead T-account and eater amoursts trome part 1 related to factony overhead. Determine the ameunt of esve- of underapplied overhead. Prepare the entry to close any over- or underapplied overhead to Cost of Coocks Sold. 3. Prepare a revised list of account bulinsecs as of Decrinter 4. Prepare an income statement for the year and a balance sbret as of December 31. Nivit: Retained earnings is snowgoo at the end of the eurreat year. 5. Assume that the $2,100 indirect materials on materials nequinition 33 should have bees direct materials charped to Job 6oy Doess this error result in overstatement or understatement of tokal assets on the balance sheet at December 31