Filling the Ledgers and journals

Labour costs and overhead costs:

The hourly rate including benefits for Forming is $_____(D) and for finishing is $______(E).

To cost jobs as they are worked on, a predetermined or budgeted overhead rate was computed for 2018 based on the following budgeted cost drivers:

Forming department ( F) machine hours

Finishing department (G) of direct labour

These overhead rates will be used throughout the year by each department. All overhead will be applied to all jobs worked on during the year in proportion to the machine-hour and/or direct-labour cost devoted to each job. Stark Inc. rents its factory building.

This budget was prepared after careful consideration of the sales outlook for the coming year. The forecasted budget consisted of the following items:

Jackson Stark Inc.

Factory Overhead Budget

For The Year Ended December 31, 2018

TRANSACTIONS :

The following transactions occurred during the month of January 2018:

1. Purchases of raw materials (on account):

Assume that costs have not changed in the last year.

2. Returns on account: 50 units of material B. (receiving report #1019)

3. The direct material requisitions were summarized, and the following data were shown on a material usage report.

Forming Department

Direct Material Usage

For the Month Ended January 31, 2018

Finishing Department

Direct Material Usage

For the Month Ended January 31, 2018

4. A summary of payroll costs incurred as per the time tickets is as follows:

Actual Labour Hours Worked

For the Month Ended January 31, 2018

Other payroll costs:

5. Apply overhead to jobs. See data for item 6 to obtain machine hours worked. (A direct labourer operates more than one machine simultaneously, so machine hours are not necessarily equal to labour hours incurred by Formers).

6. Use the following information to (a) record the completion and (b) the sale of the items:

Jackson Stark Inc.

Production and Sales Data

For the Month Ended January 31, 2018

All sales are on account.

7. Gross payroll (factory and office) of $44,000 is paid in cash.

8. The following additional overhead costs were incurred during January:

9. Utility bills received $3,100 (DR Accrued utilities and CR A/P).

10. Utility bills paid, $2,700.

11. Other selling and administrative expenses incurred, $14,750.

12. Other payments on account, $83,500.

13. Collections on account, $146,900.

14. Close under- or over-applied Factory Overhead to Cost of Goods Sold.

REQUIRED:

You must use Excel to complete your assignment. Print a copy of the completed assignment for every member in your group, which you will then bring to the assignment test.

1. Enter all starting balances in the GL and subledgers. You will need to calculate your raw materials inventory value (about $30,000) based on your assigned variables. Adjust retained earnings to balance the opening trial balance. Round all totals to the nearest dollar and all per unit numbers to two decimal places.

2. Journalize the above summary transactions, all dated January 31, 2018. (No new balance sheet accounts are required. You should need to add only the following temporary accounts: Revenue, Cost of Goods Sold, Selling & Administrative Expense, Factory Overhead.)

3. Post to the general ledger and subledgers for January 2018. (It is recommended that you post as you go, especially for accounts that have subledgers.)

4. Prepare a Pre - Closing trial balance as of January 31, 2018.(This trial balance should include all the income statement accounts).

5. Prepare schedules that reconcile the raw materials, goods in process and finished goods subledgers with the general ledger accounts as of January 31, 2018. A reconciliation template has been provided.

6. Prepare a Statement of Cost of Manufacturing for January 2018.

7. Prepare an income statement and statement of retained earnings for January 2018.

8. Prepare a balance sheet as of January 31, 2018.

9. Prepare and post a closing entry (or entries) for the month end.

10. Order your submission as follows:

· Cover sheet with group members and your variables.

· Journal entries

· General ledger

· Subledgers

· Trial balance

· Account reconciliations (#5 above).

· Complete set of Financial Statements (#6-8 above).

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