Q29E Question:聽Gateway produces elec... [FREE SOLUTION]

Chapter 19: Q29E (page 1074)

Question:Gateway produces electronic calculators. Suppose Gateway鈥檚 standard cost per calculator is $25 for direct materials and $68 for conversion costs. The following data applyto August activities:
Direct materials purchased (on account) $ 8,300
Conversion costs incurred 20,500
Number of calculators produced 300 calculators
Number of calculators sold (on account, at $105 each) 295 calculators
Requirements
1. Prepare summary journal entries for August using JIT costing, including the entryto adjust the Conversion Costs account.
2. The beginning balance of Finished Goods Inventory was $1,300. Use a T-accountto find the ending balance of Finished Goods Inventory.

Expert verified

Ending balance of finished goods inventory:$1,765

Date	Description	Debit	Credit

Trans. 1	Raw and In-Process Inventory	$ 8,300
	Accounts Payable		$ 8,300
	Being inventories purchased on credit

Trans. 2	Conversion Costs	$20,500
	Labor and overheads cost payable		$20,500
	Being conversion cost incurred

Trans. 3	Finished goods inventory	$27,900
	Raw and In-process inventory		$7,500
	Conversion Costs		20,400
	Being completed 15,000 goods transferred to the finished inventory account at standard cost

Trans. 4	Accounts Receivables	$ 30,975
	Sales Revenue		$ 30,975
	Being goods sold on credit

Trans. 5	Cost of goods sold	$27,435
	Finished goods inventory		$27,435
	Being cost of goods sold for sold units at standard cost

Trans. 6	Cost of goods sold	$ 100
	Conversion cost		$ 100
	Being under-allocated conversion cost transferred to cost of goods sold account

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Activity	Budgeted Cost of Activity	Allocation Base	Predetermined Overhead Allocation Rate

Materials handling	\( 240,000	Number of parts	\)1.00
Assembly	3,500,000	Number of assembling direct labor hours	17.00
Finishing	190,000	Number of finished units*	4.50

Product	Total Units Produced	Total Direct materials Costs	Total Direct Labor Costs	Total Number of Parts	Total Assembling Direct Labor Hours

Standard bookcase	7,000	\(91,000	\)105,000	28,000	10,500
Unfinished bookcase	7,500	82,500	75,000	22,500	7,500