Prob 2-2A_Farina Bay’s _Job Costing

Farina
bay’s computer system generated the following trial balance on December 31,
2013. The company’s manager knows something is wrong with the trial balance
because it does not allow show any balance for Goods in process Inventory but
does show balances for Factory payroll and Factory overhead accounts.

TRIAL BALANCE

Account
Debit
Credit

Cash
$1,02,000

Accounts
receivable
$75,000

Raw Material
Inventory
$80,000

Goods in
process Inventory
$0

Finished goods
Inventory
$15,000

Prepaid rent
$3,000

Accounts
payable

$17,000

Notes Payable

$25,000

Common Stock

$50,000

Retained
Earnings

$2,71,000

Sales

$3,73,000

Cost of goods
sold
$2,18,000

Factory
Payroll
$68,000

Factory
Overhead
$1,15,000

Operating
expenses
$60,000

Totals
$7,36,000
$7,36,000

After
examing various files, the manager identifies the following six source
documents that need to be processed to bring the accounting records up to
date.

Material requisition 21-3010
$10,200 direct material to job 402

Material requisition 21-3011
$18,600 direct material to job 404

Material requisition 21-3012
$5,600 indirect material

Labor time ticket 6052
$36,000 direct labor to job 402

Labor time ticket 6053
$23,800 direct labor to job 404

Labor time ticket 6054
$8,200 indirect labor

Jobs
402 and 404 are the only units in process at year end. The predetermined
overhead rate is 200% of direct labor cost.

Required:

1.
Use information on the six source documents to prepare Journal entries to
assign the following costs.

a. Direct materials costs to Goods in
process Inventory.

b. Direct labor costs to Goods in process
Inventory.

c. Overhead costs to Goods in process
Inventory

d. Indirect material costs to the Factory
Overhead account.

e. Indirect labor costs to the Factory
Overhead account.

2. Determine the revised balance of the Factory Overhead account
making the part 1. Determine whether there is any under- or over applied
overhead for the year. Prepare the adjusting entry to allocate any under or
over applied overhead to Cost of goods Sold, assuming the amount is not
material.

3. Prepare a revised Trial
Balance.

4.
Prepare an Income statement for the year 2013 and a Balance Sheet as of
December 31, 2013

5. Assume that the $5,600 on material requisition 21-3012 should
have been direct material charged to Job 404. Without providing specific
calculations, desctibe the impact of this error on the income statement for
2013 and the Balance sheet at December 31, 2013.