The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm. Purchased $80,000 of materials on account. Issued $4,000 of supplies from the materials inventory. Purchased $56,000 of materials on account. Paid for the materials purchased in transaction (1) using cash. Issued $68,000 in direct materials to the production department. Incurred direct labor costs of $100,000, which were credited to Wages Payable. Paid $106,000 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant. Applied overhead on the basis of 125 percent of $100,000 direct labor costs. Recognized depreciation on manufacturing property, plant, and equipment of $50,000. The following balances appeared in the accounts of Steve’s Cabinets for April. Beginning Ending Materials Inventory $ 148,200 ? Work-in-Process Inventory 33,000 ? Finished Goods Inventory 166,000 $ 143,200 Cost of Goods Sold 263,400 Required: a. Prepare journal entries to record the transactions. b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Journal entry

1. Dr Material 80000

                    Cr Accounts payable 80000

         (Purchase material on account)

2. Dr Work in process 4000

                       Cr Material   4000

        (issue material)

3. Dr Material   56000

                     Cr Accounts payable  56000

( Purchase material on account)

4. Dr Accounts payable  80000

                                    Cr Cash 80000

(Paid cash of material purchase)

5. Dr Work in process 68000

                          Cr Material  68000

( Issued material to production)

6. Dr Work in process  100000

                              Cr Wages payable  100000

    (Direct labor incurred)

7. Dr Factory overhead 106000

                  Cr Cash                  106000

( Paid cash on account of factory overhead)

8. Dr Work in process (100000*125%) 125000

              Cr Applied factory overhead             125000

( To record applied factory overhead)

9. Dr Factory overhead  50000

                             Cr Accumulated depreciation 50000

( To record depreciation on plant and equipment)

T-account

Cash                                                                             Material

DrCr__                                            __ DR CR

                                                                                   148200     ---

           ---80000                                                          80000      4000

          ---106000                                                            56000 ---

                                                                                                         -- 68000

Work in process                                                              Accounts payable

DrCr___                                          ___ DR Cr                                                                                                        

33000 ---

4000---                                                                              80000        --  80000

68000--                                                                                               -- 56000

100000---

125000 ---

Wages payable                                                          Factory overhead

Dr Cr__                                          __ Dr Cr

            ---  100000                                                  106000 --

                                                                                50000 --

Applied factory overhead                                    Accumulated depreciation

DrCr__                                          _ Dr Cr_

          ---   1250000                                                                ---   50000

Finished goods                                                    Cost of goods sold

DrCr__                                          _ Dr Cr_

166000     ---                                                                         ---     263400

                ---   143200  

Material end =?  

Material (end) = 148200 +80000+56000-4000-68000=

Work in process (end) = ?

work in process  = 148200+166000-143200 =171000