P2-2A For the year ended December 31, 2014, the job cost sheets of Cinta Company

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P2-2A For the year ended December 31, 2014, the job cost sheets of Cinta Company
contained the following data.

Job Direct Direct Manufacturing Total
Number Explanation Materials Labor Overhead Costs
7640 Balance 1/1 $25,000 $24,000 $28,800 $ 77,800
Current year’s costs 30,000 36,000 43,200 109,200
7641 Balance 1/1 11,000 18,000 21,600 50,600
Current year’s costs 43,000 48,000 57,600 148,600
7642 Current year’s costs 58,000 55,000 66,000 179,000

Other data:

1. Raw materials inventory totaled $15,000 on January 1. During the year, $140,000 of raw
materials were purchased on account.

2. Finished goods on January 1 consisted of Job No. 7638 for $87,000 and Job No. 7639
for $92,000.

3. Job No. 7640 and Job No. 7641 were completed during the year.

4. Job Nos. 7638, 7639, and 7641 were sold on account for $530,000.

5. Manufacturing overhead incurred on account totaled $120,000.

6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labor
$18,000, and depreciation on factory machinery $8,000.

Instructions

(a) Prove the agreement of Work in Process Inventory with job cost sheets pertaining to
unfi nished work. (Hint: Use a single T-account for Work in Process Inventory.) Calculate
each of the following, then post each to the T-account: (1) beginning balance,
(2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed
jobs.

(b) Prepare the adjusting entry for manufacturing overhead, assuming the balance is
allocated entirely to Cost of Goods Sold.

(c) Determine the gross profi t to be reported for 2014