The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2017: Beginning Ending
Inventories: Raw materials $17,000 $19,000
Work in process 9,000 14,000
Finished goods 11,000 8,000
Total $37,000 $41,000

In addition, the following transactions occurred in 2017:

1. Raw materials purchased on account, $75,000.
2. Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable).
3. Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $9,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation).
4. Assigned $80,000 of factory labor to jobs.
5. Applied $36,000 of overhead to jobs. Instructions

Required:
a. Journalize the above transactions.
b. Reproduce the manufacturing cost and inventory accounts.
c. From an analysis of the accounts, compute the following:

1. Raw materials used.
2. Completed jobs transferred to finished goods.
3. Cost of goods sold.
4. Under- or overapplied overhead.

Ricci Manufacturing Corporation

a. Journal Entries;

1. Debit Raw Materials Inventory $75,000

Credit Accounts Payable $75,000

To record the purchase of materials on account.

2. Debit Factory Wages $80,000

Credit Factory Wages Payable $80,000

To record factory labor incurred on account.

3. Debit Manufacturing Overhead:

             Utilities $6,800

             Depreciation $8,000

             Machinery Repairs $9,200

             Factory Insurance $9,000

 Credit: Accounts Payable $25,000

             Accumulated Depreciation $8,000

To record manufacturing overhead costs incurred.

4. Debit Work in Process $80,000

Credit Factory Wages $80,000

To record the assignment of factory labor to jobs.

5. Debit Work in Process $36,000

Credit Manufacturing Overheads $36,000

To apply overhead to jobs.

b. Manufacturing cost and Inventory Accounts:

Raw Materials

Accounts Titles          Debit       Credit

Balance                   $17,000

Accounts payable   75,000

Work in Process                        73,000

Balance                                    $19,000

Work in Process

Accounts Titles          Debit       Credit

Balance                   $9,000

Raw materials         73,000

Factory Wages       80,000

Manuf. Overhead  36,000

Finished Goods                   $184,000

Balance                                  $14,000

Finished Goods

Accounts Titles          Debit       Credit

Balance                   $11,000

Work in Process    184,000

Cost of goods sold              $187,000

Balance                                   $8,000

c. Computation of:

1. Raw materials used

= Beginning Inventory + Purchases - Ending Inventory

= $17,000 + $75,000 - $19,000

= $73,000

2. Completed jobs transferred to finished goods

= Beginning WIP + Raw materials used + Labor + Overhead - Ending WIP

= $9,000 + $73,000 + $80,000 + $36,000 - $14,000

= $184,000

3. Cost of goods sold

= Beginning Finished Goods + Manufacturing Costs - Ending Finished Goods

= $11,000 + $184,000 - $8,000

= $197,000

4. Under- or overapplied overhead

= Total Incurred manufacturing overhead - applied manufacturing overhead

= $33,000 - $36,000

= $3,000 over-applied

Explanation:

a) Data:

                           Beginning        Ending

Inventories:

Raw materials      $17,000         $19,000

Work in process     9,000            14,000

Finished goods      11,000             8,000

Total                   $37,000          $41,000