Designer Rags makes evening dresses. The following information was gathered from the company records for 2010, the first year of company operations. Work in Process Inventory at the end of 2010 was $31,500.
Direct material purchased on account ................................$1,110,000
Direct material issued to production .................................. 894,000
Direct labor payroll accrued ............................................ 645,000
Indirect labor payroll accrued .......................................... 186,000
Prepaid factory insurance expired ...................................... 6,000
Factory utilities paid ...................................................... 42,900
Depreciation on factory equipment recorded .......................... 65,100
Factory rent paid ........................................................... 252,000
Sales (all on account) ...................................................... 2,862,000
The company's gross profit rate for the year was 35 percent.
a. Compute the cost of goods sold for 2010.
b. What was the total cost of goods manufactured for 2010?
c. What is Finished Goods Inventory at December 31, 2010?
d. If net income was $250,000, what were total selling and administrative expenses for the year?
e. Prepare journal entries to record the flow of costs for the year, assuming the company uses a perpetual inventory system and a single Manufacturing Overhead Control account and that actual overhead is included in WIP Inventory.