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Metro’s computer system generated the following trial balance on December 31 2011 The company’s manager knows that the trial balance is wrong because it does not show any balance for Goods in

Metro’s computer system generated the following trial balance on December 31, 2011. The company’s manager knows that the trial balance is wrong because it does not show any balance for Goods in Process Inventory but does show balances for the Factory Payroll and Factory Overhead accounts.

 

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

Jobs 603 and 604 are the only units in process at year-end. The predetermined overhead rate is 80% 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 materials 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 after making the entries in part 1. Determine whether there is under- or overapplied overhead for the year. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold, assuming the amount is not material.

3. Prepare a revised trial balance.

4. Prepare an income statement for year 2011 and a balance sheet as of December 31, 2011. Analysis Component

5. Assume that the $1,500 indirect materials on materials requisition 94-233 should have been direct materials charged to Job 604. Without providing specific calculations, describe the impact of this error on the income statement for 2011 and the balance sheet at December 31, 2011.

Jul 19 2020 View more View Less

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