Problem - Dorothy Huddle started Huddle Manufacturing Company to make a universal television remote control device that she had invented. The company's labor force consisted of part-time employees. The following accounting events affected Huddle Manufacturing Company during its first year of operation. (Assume that all transactions are cash transactions unless otherwise stated.)
Transactions for January 2011, First Month of Operation
1. Issued common stock for $9,500.
2. Purchased $405 of direct raw materials and $65 of production supplies.
3. Used $280 of direct raw materials.
4. Used 80 direct labor hours; production workers were paid $9.40 per hour.
5. Expected total overhead costs for the year to be $3,000, and direct labor hours used during the year to be 1,000. Calculate an overhead rate and apply the appropriate amount of overhead costs to Work in Process Inventory.
6. Paid $141 for salaries to administrative and sales staff.
7. Paid $23 for indirect manufacturing labor.
8. Paid $200 for rent and utilities on the manufacturing facilities.
9. Started and completed 100 remote controls during the month; all costs were transferred from the Work in Process Inventory account to the Finished Goods Inventory account.
10. Sold 75 remote controls at a price of $21.4 each.
Transactions for Remainder of 2011
11. Acquired an additional $17,500 by issuing common stock.
12. Purchased $3,850 of direct raw materials and $925 of production supplies.
13. Used $3,020 of direct raw materials.
14. Paid production workers $9.40 per hour for 890 hours of work.
15. Applied the appropriate overhead cost to Work in Process Inventory.
16. Paid $1,551 for salaries of administrative and sales staff.
17. Paid $245 of indirect manufacturing labor cost.
18. Paid $2,410 for rental and utility costs on the manufacturing facilities.
19. Transferred 900 additional remote controls that cost $12.72 each from the Work in Process Inventory account to the Finished Goods Inventory account.
20. Determined that $168 of production supplies was on hand at the end of the accounting period.
21. Sold 850 remote controls for $21.40 each.
22. Determine whether the overhead is over- or underapplied. Close the Manufacturing Overhead account to the Cost of Goods Sold account.
23. Close the revenue and expense accounts.
Required -
For each of the above transactions, post the effects to the appropriate T-accounts.
Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2011.