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, 2012"
Balance
Account Title Debit Credit
Cash $14,000
Accounts receivable 155,000
Inventories:
Materials 5,700
Work in process 39,400
Finished goods 20,400
Plant assets 200,000
Accumulated depreciation $72,000
Accounts payable 127,000
Wages payable 1,700
Common stock 142,000
Retained earnings 91,800
Sales revenue —
Cost of goods sold —
Manufacturing overhead —
Marketing and general expenses —
Total $434,500 434,500
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, $39,400; $0 for Job 121
– Finished goods subledger: Large Stars, $9,400; Small Stars, $11,000
June transactions are summarized as follows:
a. Collections on account, $152,000.
b. Marketing and general expenses incurred and paid, $28,000.
c. Payments on account, $36,000.
d. Materials purchases on credit: Paper, $22,900; indirect materials, $3,800.
"e. Materials used in production (requisitioned):
– Job 120: paper , $850
– Job 121: paper, $7,650
– Indirect materials, $1,000 "
f. Wages incurred and assigned during June, $35,000. Labor time records for the month: Job 120, $3,500; Job 121, $16,600; indirect labor, $14,900.
g. Wages paid in June include the balance in the Wages payable account at May 31 and $32,200 of wages incurred during June.
h. Depreciation on plant and equipment, $2,600.
i. Manufacturing overhead was allocated at the predetermined rate of 50% of direct labor cost.
j. Jobs completed during the month: Job 120, 300,000 Large Stars at total cost of $45,500.
k. Credit sales on account: all of Job 120 for $111,000.
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, 2012.
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.
Hello I am unable to figure this assignment out. the Howie Stars produces starts for elementary teachers to reward their students. I am unable to figure out all 5 questions I am completely lost HELP please
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To answer the questions, we need to follow the steps below:
1. Journalize the transactions for the company.
- Take each transaction and record it in the general journal, including the date, accounts affected, and the corresponding debit and credit amounts.
2. Open T-accounts for the general ledger, Materials ledger, Work in process ledger, and Finished goods ledger.
- Create separate T-accounts for each ledger.
- In the general ledger, include the account title, debit and credit columns, and the balance column.
- In the subsidiary ledgers (Materials, Work in process, Finished goods), include the specific details for each account (e.g., individual materials, job numbers).
- Use the balances given in the trial balance and subsidiary ledgers to fill in the opening balances.
3. Post the journal entries to the T-accounts.
- Take each journal entry and transfer the corresponding amounts to the appropriate T-accounts.
- Record the journal entry reference in the T-accounts for future reference.
4. Prepare a trial balance at June 30, 2012.
- Add up the debit and credit balances in the general ledger T-accounts.
- Transfer these balances to a new trial balance.
- Verify that the total debits equal the total credits to ensure the books are in balance.
5. Use the Work in process inventory T-account to prepare a schedule of cost of goods manufactured for June.
- Calculate the total cost of goods manufactured by summing up all the costs assigned to the Work in process account during June.
- Include materials used, direct labor incurred, and overhead allocated.
6. Prepare an income statement for June.
- Summarize the revenue from credit sales and subtract the cost of goods sold to calculate the gross profit.
- Deduct the marketing and general expenses to calculate the net income.
By following these steps, you should be able to complete the requirements for analyzing Howie Stars' trial balance.