Assigning Costs to Jobs
The following transactions occurred in June at Fast Wheels, Inc., a custom bicycle manufacturer:
1. Purchased $2,000 of materials.
2. Issued $100 of supplies from the materials inventory.
3. Purchased $2,500 of materials.
4. Paid for the materials purchased in transaction (1).
5. Issued $3,000 in direct materials to the production department.
6. Incurred direct labor costs of $2,500, which were credited to Wages Payable.
7. Paid $2,150 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.
8. Applied overhead on the basis of 125 percent of direct labor costs.
9. Recognized depreciation on manufacturing property, plant, and equipment of $500.
The following balances appeared in the accounts of Fast Wheels for June:
|
|
Beginning
|
Ending
|
|
Materials Inventory
|
$ 900
|
?
|
|
Work-in-Process Inventory
|
1,650
|
?
|
|
Finished Goods Inventory
|
6,500
|
$ 3,650
|
|
Cost of Goods Sold
|
|
7,300
|
Required:
a. Prepare journal entries to record the transactions.
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.