Review the data of Northwood Company and prepare journal entries to record activity and prepare an income statement for the year. This item will be reviewed by your instructor with any necessary feedback given to support your project moving forward. Review the Scenario and answer the following questions.
The company has a ball that sells for $25. All the company's transactions are cash sales.
The company uses a job-order costing system in which overhead is applied to jobs onthe basis of direct-labor cost. Its predetermined overhead rate is based on a cost formual that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw Material $25,000
Work in process 10,000
Finished Goods 40,000
During the year, the following transactions were completed:
Raw materials purchased for cash $275,000Raw materials requisitioned for use in production, $280,000 (materials costing $220,000 were charged directly to jobs; the remaining materials were indirect).Costs for employee services were incurred as follows:Prepare journal entries to record the transactions for the year.
Prepare T-accounts for inventories, Manufacturing Overhead and Cost of Goods Sold. (Don't forget beginning balances)
Is Manufacturing Overhead under or overapplied for the year? Prepare a journal entry to close any balance to Cost of Goods Sold. Prepare an income statement for the year.