Manufacturing statement and income statement
QUESTION 4 Manufacturing statement and income statement (18 marks)
Spreadsheet. See the Spreadsheet Advice PDF in Interact2 Resources and the examples in your textbook.
Check the assignment requirements below paying particular attention to the spreadsheet requirements. Ensure you have separate data and report areas with the latter showing only formulas. Use IF functions to allow for the possibility of either a net profit or a net loss. Show row and column headings and paste both a normal view and a formula view.
See your text page 29, P1-13. The question below has been adapted from P1-13.
Adjustments are to be made in respect of the following:
(a) Accrued expenses: Salaries (Office) $5000, Salaries (Factory) $3000
(b) Insurance paid in advance, $2000
(c) Taxation expense for current year, $500 000
(d) Depreciation of factory plant, $35 000
(e) Insurance and rates are to be apportioned three-quarters to the factory and one-quarter to the office.
Required:
(a) Prepare a manufacturing statement for the year.
(b) Prepare an income statement for the year.
QUESTION 6 Understanding the entries in the Materials Control account (6 marks)
See your text page 64.
The Materials Control account balance was $20 000 on 30 June. Raw materials purchased during June cost $90 000. Direct materials issued to production during June were $50 000 and indirect materials consumed were $30 000.
Required:
Materials Control T-account to record these transactions and to determine the balance of Materials Control on 1 June.
QUESTION 7 Understanding the entries in the Accrued Payroll account (8 marks)
Salaries and wages payable to factory employees were $10 000 on 1 March and $4000 on 31 March. Gross salaries and wages paid during March totalled $40,000. March’s direct labour totalled $18 000.
Required:
T-account for Accrued Payroll and general journal entries for recording salaries and wages earned by, and paid to, factory employees during March.
QUESTION 8 Payroll entries (8 marks)
See page 68 of your text.
The Patel Company has a gross payroll of $8 000 per day. Withholdings for PAYG taxes are $2400 per day. There are no other deductions from employees’ earnings. The firm works five days per week, Monday to Friday inclusive. The payroll period covers Thursday to Wednesday inclusive and the payroll for the week is paid on the following Friday.
Gross payroll consists of $4800 direct labour, $1600 indirect factory labour, $1120 selling expenses and $480 general and administrative expenses each day. The following calendar should be used to answer the questions:
(a) What is the total amount to be credited to Accrued Payroll in respect of September earnings?
(b) If balance day adjustments are performed at the end of each month, what would be the balance in Accrued Payroll account at the close of business on September 30?
(c) Suppose that a single journal entry is made on the last day of each month to record the distribution of total labour costs for the month, but that entries are made each Friday to record payment of wages and withholdings. Also, PAYG taxes withheld are remitted to the Taxation Department at the end of each month.
(i) Show the weekly journal entry.
(ii) Construct the necessary ledger accounts to show all entries in respect of labour costs during the month of September.
QUESTION 10 Service department cost allocation (20 marks)
Review the examples in your textbook and see page 100.
A. Create a manual, handwritten solution. Scan or use your phone to copy and paste an image in your assignment. If using a smart phone, consider using a free scanning app such as Camscanner, Office Lens or Google Drive or search for an app. Let us know which app you chose.
Use the algebraic method for the reciprocal services method.
B. Solve with a spreadsheet. Show the Matrix algebra solution.
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