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Cost Accounting Cycle Entries in T Accounts At the beginning of October the ledger of the Highlander Company contained among other accounts the following Materials $35000 Work in Process

Cost Accounting Cycle Entries in T Accounts. At the beginning of October, the ledger of the Highlander Company contained (among other accounts) the following: Materials, $35,000; Work in Process, $40,000; Finished Goods, $25,000. During October the following transactions were completed

(a) Materials were purchased on account at a cost of $18,500.

(b) Materials in the amount of $22,000 were issued from the storeroom for use in production.

(c) Requisitions for indirect factory materials and supplies amounted to $2,000.

(d) The total payroll for the month was $35,000 including salesmen's salaries of $5,000 and office salaries of $5,000. Labor time tickets show that $20,000 of the payroll was direct labor. Income taxes were withheld at the rate of 10% of wages earned, and employees' FICA taxes of $1,440 were deducted. The payroll due the employees was paid during the month.

(e) The employer's payroll taxes consist of $1,440 FICA, 1.4% state unemployment insurance, and .5% federal unemployment insurance tax. Two hundred and seventy dollars of the taxes apply to salesmen's salaries and $180 to office salaries.

(f) Sundry manufacturing expenses requiring an outlay of $10,000 were paid.

(g) Factory overhead of 90% of the direct labor cost is charged to production,

(h) Cost of production completed for the month totaled $75,000, and finished goods in the shipping room at the end of October totaled $10,000.

(i) Customers were billed for $122,000 for shipments made during October.

(j) Customers paid $68,000 on account.

Required: (1) Record in T accounts the transactions for October using one work in process account.

(2) Close the income statement accounts to Income Summary. Close underapplied factory overhead to Cost of Goods Sold.

May 14 2020 View more View Less

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