ACC 202 Howie Stars produces starts for elementary teachers to reward their students

Howie Stars produces starts for elementary teachers to reward their students. Howie Stars' trial balance on June 1 follows:

HOWIE STARS
Trial Balance
June 1, 2014

Balance

Account Title

Debit

Credit

Cash

$19,000

Accounts receivable

188,000

Inventories:

Materials

5,700

Work in process

42,500

Finished goods

22,000

Plant assets

260,000

Accumulated depreciation

$70,000

Accounts payable

135,000

Wages payable

1,700

Common stock

140,000

Retained earnings

190,500

Sales revenue

—

Cost of goods sold

—

Manufacturing overhead

—

Marketing and general expenses

—

Total

537,200

June 1 balances in the subsidiary ledgers were as follows:

– Materials subledger: Paper, $4,700; indirect materials, $1,000

– Work in process subledger: Job 120, $42,500; $0 for Job 121

– Finished goods subledger: Large Stars, $9,600; Small Stars, $12,400

June transactions are summarized as follows:

a. Collections on account, $141,000.

b. Marketing and general expenses incurred and paid, $22,000.

c. Payments on account, $42,000.

d. Materials purchases on credit: Paper, $22,900; indirect materials, $4,300.

e. Materials used in production (requisitioned):
     – Job 120: paper , $850
     – Job 121: paper, $7,750
     – Indirect materials, $1,800

f. Wages incurred and assigned during June, $34,000. Labor time records for the month: Job 120, $4,500; Job 121, $16,600; indirect labor, $12,900.

g. Wages paid in June include the balance in the Wages payable account at May 31 and $31,300 of wages incurred during June.

h. Depreciation on plant and equipment, $2,700.

i. Manufacturing overhead was allocated at the predetermined rate of 60% of direct labor cost.

j. Jobs completed during the month: Job 120, 200,000 Large Stars at total cost of $55,550.

k. Credit sales on account: all of Job 120 for $104,000.

l. Closed the Manufacturing overhead account to Cost of goods sold.

Requirements:

1. Journalize the transactions for the company. Howie uses a perpetual inventory system.

2. Open T-accounts for the general ledger, the Materials ledger, the Work in process ledger, and the Finished goods ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T-accounts using the transaction letters as a reference.

3. Prepare a trial balance at June 30, 2014.

4. Use the Work in process inventory T-account to prepare a schedule of cost of goods manufactured for the month of June.

5. Prepare an income statement for the month of June.

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