P17-27A Howie Stars produces stars for elementary teachers to reward their students

Price: $3.99


P17-27A Comprehensive accounting for manufacturing transactions [90–120 min]

Howie Stars produces stars for elementary teachers to reward their students. Howie Stars’ trial balance on June 1 follows:
HOWIE STARS Trial Balance June 1, 2012

HOWIE STARS Trial Balance June 1, 2012
			Balance
		Account Title	Debit	Credit
		Cash	$ 14,000
		Accounts receivable	155,000
		Inventories:
		Materials	5,700
		Work in process	39,400
		Finished goods	20,400
		Plant assets	200,000
		Accumulated depreciation		$ 72,000
		Accounts payable		127,000
		Wages payable		1,700
		Common stock		142,000
		Retained earnings		91,800
		Sales revenue	—	—
		Cost of goods sold	—
		Manufacturing overhead	—
		Marketing and general expenses	—
		Total	$434,500	$434,500

June 1 balances in the subsidiary ledgers were as follows:

• Materials subledger: Paper, $4,700; indirect materials, $1,000

• Work in process subledger: Job 120, $39,400; $0 for Job 121

• Finished goods subledger: Large Stars, $9,400; Small Stars, $11,000

June transactions are summarized as follows:

a. Collections on account, $152,000.

b. Marketing and general expenses incurred and paid, $28,000.

c. Payments on account, $36,000.

d. Materials purchases on credit: Paper, $22,900; indirect materials, $3,800.

e. Materials used in production (requisitioned):

• Job 120: paper, $850

• Job 121: paper, $7,650

• Indirect materials, $1,000

f. Wages incurred and assigned during June, $35,000. Labor time records for the month: Job 120, $3,500; Job 121, $16,600; indirect labor, $14,900.

g. Wages paid in June include the balance in the Wages payable account at May 31 and $32,200 of wages incurred during June.

h. Depreciation on plant and equipment, $2,600.

i. Manufacturing overhead was allocated at the predetermined rate of 50% of direct
labor cost.

j. Jobs completed during the month: Job 120, 300,000 Large Stars at total cost of $45,500.

k. Credit sales on account: all of Job 120 for $111,000.

l. Closed the Manufacturing overhead account to Cost of goods sold.

and so on.