P2-2A For the year ended December 31, 2014, the job cost sheets of Cinta Company contained the following data.

 

Number   Explanation   Materials   Labor   Overhead   Costs 7640   Balance 1/1   $25,000   $24,000   $28,800   $  77,800     Current year’s costs   30,000   36,000   43,200   109,200 7641   Balance 1/1   11,000   18,000   21,600   50,600     Current year’s costs   43,000   48,000   57,600   148,600 7642   Current year’s costs   58,000   55,000   66,000   179,000   Â

Job                                                          Direct             Direct         Manufacturing               Total

 

 

 

 

 

 

 

Other data:

1.  Raw materials inventory totaled $15,000 on January 1. During the year, $140,000 of raw materials were purchased on account.

2.  Finished goods on January 1 consisted of Job No. 7638 for $87,000 and Job No. 7639 for $92,000.

3.  Job No. 7640 and Job No. 7641 were completed during the year.

4.  Job Nos. 7638, 7639, and 7641 were sold on account for $530,000.

 

 

 

 

5.  Manufacturing overhead incurred on account totaled $120,000.

6.  Other manufacturing overhead consisted of indirect materials $14,000, indirect labor

$18,000, and depreciation on factory machinery $8,000.

 

 

Instructions

(a)  Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. (Hint: Use a single T-account for Work in Process Inventory.) Cal- culate each of the following, then post each to the T-account: (1) beginning balance,

(2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed jobs.

(b)  Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold.

(c)   Determine the gross profit to be reported for 2014.