Exercise 3-31 Manufacturing Cost Flows (LO 3-2, 3-5, 3-6) [The following information applies to the questions displayed below.] Reimel Furniture Company, Inc., incurred the following costs during 20x2. Raw material used $ 172,000 Direct labor 322,000 During 20x2, manufacturing overhead of $170,000 was applied to production. Products costing $121,000 were finished, and products costing $132,000 were sold on account for $195,000. There were no purchases of raw material during the year. The beginning balances in the firm’s inventory accounts are as follows: Raw material $ 226,000 Work in process 16,000 Finished goods 32,000 Exercise 3-31 Part 1 Required: 1. Prepare T-accounts to show the flow of costs through the company’s manufacturing accounts during 20x2.

1.) Dr Work in process 172000

              Cr  Material              172000

    (Raw material used)

2.) Dr Work in process 322000

             Cr   Wages payable                    322000

      ( Record direct labor used)

3.) Dr Work in process 170000

              Cr  Applied factory overhead  170000

       ( To record applied factory overhead)

4. Dr Finished goods 121000

             Cr Work in process    121000

      ( To record finished goods)

5.  a)Dr Cost of goods sold  132000

                       Cr Finished goods      132000

     b)  Dr  Account receivable    195000

                     Cr sales revenue                195000  

Explanation:

T-account

     Raw material                                                         Work in process                

DrCr_                                                 DR CR

226000---                                                                  16000    

                  172000                                                72000

54000(bal)                                                                  322000

                                                                                    170000   121000

Wages payable                                                         Factory overhead

DrCr                                               DR Cr

           ---    322000

Applied factory overhead                                              Finished goods

Dr Cr                                               Dr Cr

               170000                                                      32000 ---132000

                                                                                       121000 ---    

 Cost of goods sold                                                    Sales revenue

Dr Cr                                               Dr Cr

132000                                                                           ---195000

                                                                                             ---

 Account receiable                                                    

Dr Cr                                          

   195000