BANITOG, BRIGITTE C.

BSA 211

CHAPTER 5
1. Prepare a schedule of cost of goods manufactures for 20X1.

Canseco Company

Schedule Cost of Goods Manufactured

Year Ended December 31, 20X1 (in thousands)

Direct materials:

Beginning inventory, Jan. 1, 20X1 22,000

Purchase cost of direct materials 75,000

Cost of direct materials available for use 97,000

Ending inventory, Dec. 31, 20X1 26,000

Direct materials used 71,000

Direct manufacturing labor 25,000

Indirect manufacturing costs:

Indirect manufacturing labor 15,000

 Plant insurance 9,000

Depreciation - plant, building, and equipment 11,000

Repairs and maintenance - plant 4,000

Total indirect manufacturing costs 39,000

Manufacturing costs incurred during 20X1 135,000

Beginning work-in-process inventory, Jan 1, 20X1 21,000

Total manufacturing costs to account for 156,000

Ending work-in-process inventory, Dec. 31, 20X1 20,000

Cost of goods manufactured 136,000

2. Revenues in 20X1 were P300 million. Prepare the 20X1 income statement:

Canseco Company

Income statement

Year Ended December 31, 20X1 (in thousands)

Revenues 300,000

Cost of goods sold:

Beginning finished goods, Jan. 1, 20X1 18,000

Cost of goods manufactured 136,000

Cost of goods available for sale 154,000

Ending finished goods, Dec. 31 20X1 23,000

Cost of goods sold 131,000

Gross margin 169,000

Operating costs:
 Marketing, distribution, and customer-service costs 93,000

General and administrative costs 29,000

Total operating costs 122,000

Operating income/(loss) 47,000

PROBLEM 1
1) Journal Entries:
Date Accounts Title Debit (P) Credit (P)

1 Direct material 80,000

Accounts Payable 80,000

(being purchase of direct materials)

2 Work in Progress 42,000

Manufacturing Overhead 11,500

Wages payable 53,500

(being labor made payable)

3 Manufacturing Overhead 67,200

Accounts Payable 67,200

(being manufacturing equipment purchased)

4 Manufacturing Overhead 80,500

Accounts Payable 80,500

(being other manufacturing overhead incurred)

5 Work in Progress 56,000

Direct material 56,000

(being 70% of DM transferred to WIP)

5.1 Work in Progress 159,200

Manufacturing Overhead 159,200

(Being all Manufacturing overhead transferred to WIP A/C)

6 Finished Goods 154,320

Work in Progress 154,320

Goods finished= (42,000+56,000+159,200) *60%=154,320

7 COGS 138,888

Finished Goods 138,888

(Being 90% of the finished goods sold)

2) T-Accounts:

Direct Material A/c

Debit Amount Credit Amount

AP 80,000 WIP 56,000

CB 24,000

Manufacturing Overhead A/c

Sup. Labor 11,500 WIP 159,200

Manu. Eq. 67,200

Other exp 80,500

Work in Progress A/c

DM 56,000 FG Inv. 154,320

DL 42,000 CB 102,880

Manu. o/h 159,200

Total 257,200 Total 257,200

Finished Goods Inventory A/c

WIP 154,320 COGS 138,888

CB 15,432

Cost of Goods Sold A/c

FG Inv. 138888

3) Cost of Goods Sold Statement:

Amount

Material:

Purchased 80,000

Less: CB 24,000

Direct mat. Applied 56,000

Direct labor applied 42,000

Manuf. Overhead 159,200

Total Manuf. Costs incurred 257,200

Less: WIP - CB (102,880)

Finished Goods 154,320

Less: FG-CB (15,432)

Cost of Goods Sold 138,888