(Job-Order Costing) The following selected account balances are taken from the books of Future Company as of January 1 of the…
(Job-Order Costing) The following selected account balances are taken from the books of Future Company as of January 1 of the year 2011: Account Balance ($) Cash 12,000 Work in Process 40,000 Accounts Payable 75,000 Accounts Receivable 48,000 Finished Goods 100,000 Salaries and Wages Payable 12,000 Prepaid Insurance 8,000 Accumulated Depreciation 120,000 Raw Materials 30,000 The following data relate to the activities of Future Company during the year: 1. Raw materials purchased on account, $150,000. 2. Raw materials issued to production, $145,000 (all direct materials) 3. Advertising cost incurred for the year, $50,000 (credit accounts payable). 4. Utilities cost incurred for the factory, $35,000 (credit accounts payable). 5. Salaries and wages costs incurred: direct labor, $250,000 (30, hours); indirect labor, $75,000; selling and administrative, $140,000. 6. Depreciation recorded for the year, $20,000, for which 75 percent related to the factory and 25 percent related to selling and administrative functions. 7. Other factory overhead costs incurred for the year, $30,000 (credit accounts payable). 8. Other selling and administrative expenses incurred for the year, $25,000 (credit accounts payable). 9. Prepaid insurance relates to factory production. One-half of the $8,000 of prepaid insurance expired during the current year. 10. The company applies overhead cost to production on a basis of direct labor hours, at $5.50 per hour. 11. Goods completed (cost of goods manufactured) for the year totaled $550,000. 12. Goods which had a cost of $540,000 according to the costing system were sold on account for $800,000. 13. Collections on account from customers during the year totaled $790,000. 14. Cash distributed during the year: on accounts payable, $300,000; for salaries and wages, $460,000. Required: a- Post the above entries directly to Future Company’s T-accounts and compute the ending balance in each T-account. Key your entries with the numbers 1-14. b- Is overhead under applied or over applied for the year 2011? Close the balance to Cost of Goods Sold. (Key the entry as #15.) c- Prepare an income statement for the year ended December 31, 2011.
