chapter no.04
DESCRIPTION
The Cost Accounting System Design and operation. Chapter No.04. It is the type of book keeping in which double entry transactions are recorded for cost accounting transactions. Following are the major cost accounting transactions: Purchase of materials Issue of materials Incurring labour - PowerPoint PPT PresentationTRANSCRIPT
CHAPTER NO.04
The Cost Accounting SystemDesign and operation
COST ACCOUNTING BOOK KEEPING It is the type of book keeping in which
double entry transactions are recorded for cost accounting transactions.
Following are the major cost accounting transactions: Purchase of materials Issue of materials Incurring labour Incurring factory overhead Completing goods Selling goods to customers
Purchase of Materials
a. Materials 10 500
Accounts Payable10 500
Materials purchased on credit
Issue of direct materials to production
b. Work in process account 9 500
Materials account9 500
Direct materials issued to production
Issue of indirect materials to production
c. Factory overhead account 500
Materials account 500
Indirect materials issued to production
Return of materials to suppliers
d. Accounts payable 500
Materials account 500
Materials returned to suppliers
Preparation of Payroll
e. Payroll account 19 500
Accrued payroll19 500
Preparation of payroll
Classification of payroll
f. Work in process account-direct labour 9 500 Factory overhead-indirect labour 2500
Selling overhead-sales salaries 3000Admin overhead-office salaries 4500
Payroll account19 500 Payroll Classified
Payment of payroll
g. Accrued payroll account 19 500
Bank account17 500 Income tax Payable1000 Insurance payable1000
Payroll paid
Other manufacturing overhead incurred
h. Factory overhead account 8 500
Account payables7 500 Accumulated Depreciation1000
Other factory overhead incurred
Other Selling and Admin expenses incurred
i. Selling overhead- 3000Admin overhead- 4500
Account Payables7 500
Other selling and admin expenses incurred
Factory overhead applied into production
j. Work in Process Account 8 500
Factory overhead account8 500
Factory overhead charged to production
When goods completed
k. Finished goods account 19 500
Work in process account19 500
Goods completed and transferred to finished goods
When goods sold
l. Cost goods sold account 19 500 Finished goods account19 500
Cost of goods sold recorded
Sales account 29 500
Account Receivable 29 500
Sales value of goods recorded
When cash collected from receivables
m. Cash account 19 500
Account Receivables19 500
Cash collected from receivables
When cash paid to payables
n. Account Payables 19 500
Bank account19 500
Cash paid to payables
QUESTIONS
EXERCISE NO.01During May the Endeavor company showed the following
transactions:1. Materials purchased on account for $40,000.2. Direct materials issued for $65,000.3. Indirect materials issued for $3,500.4. Total Payroll
Direct Labour $80,000 Indirect labour $9,500
5. Materials returned to suppliers for $900.6. Payroll paid $75,0007. Sundry manufacturing overhead incurred 42,000.8. Marketing and administrative expenses incurred $8,500.9. Account receivable collected $300,000.10. Accounts payable paid $135,000.11. Depreciation charged at 2% of cost of $120,000 of a factory building and
10% of cost of 237240 of factory equipment.12. Factory overhead applied at the rate of 60% of direct labour cost.13. Goods finished during the month for $203,400.14. Goods sold costing $205000 and sales value $285000.Required: Record journal entries for above transactions.
EXERCISE NO.02During September the MacFarland company showed the
following transactions:1. Materials purchased on account for $48,500.2. Direct materials issued for $62,000.3. Indirect materials issued for $6,000.4. Total Payroll
Direct Labour $40,000 Indirect labour $10,000 Office salaries $15,000 Sales salaries $20,000
5. Payroll paid after deducting 6.5% income tax and 10% insurance payable.6. Sundry manufacturing overhead incurred $12,600.7. Factory overhead applied at the rate of 80% of direct labour cost.8. Goods finished during the month for $155,000.9. Goods sold costing $160,000 and sales value $222,000.10. Cash collected from receivables for $168,000.
Required: Record journal entries for above transactions.
EXERCISE NO.03During November The Design company showed the following
transactions:1. Materials purchased on account for $33,000.2. Direct materials issued for $22,000.3. Indirect materials issued for $6,500.4. Total Payroll
Direct Labour $15,000 Indirect labour $4,000 Office salaries $3,000 Sales salaries $8,000
5. Payroll paid after deducting 6.5% income tax and 10% insurance payable.
6. Sundry manufacturing overhead incurred $2000.7. Factory overhead applied at the rate of 110% of direct labour cost.8. Goods finished during the month for $48,300.9. Goods sold costing $45,000 and sales value $65,000.
Required: Record journal entries for above transactions.
EXERCISE NO.04During September the Stillwater company showed the following
transactions:1. Materials purchased on account for $120,000.2. Direct materials issued for $60,000.3. Indirect materials issued for $15,000.4. Total Payroll
Direct Labour $45,000 Indirect labour $9,000 Sales salaries $15,000 Office salaries $21,000
5. Materials returned to suppliers for $900.6. Payroll paid after deducting 10% income tax payable.7. Indirect materials purchased $26,250.8. Sundry manufacturing overhead incurred 6,900.9. Marketing and administrative expenses incurred $8,500.10. Depreciation charged at 10% of cost of $120,000 of a factory Machinery.11. Factory overhead applied at the rate of $6 per hour and number of direct
labour hours are 6,000.12. Goods finished during the month for $126,000.13. Goods sold costing $96,000 and sales value $150,000.Required: Record journal entries for above transactions.
EXERCISE NO.05During January the Spacecraft company showed the following
transactions:1. Materials purchased on account for $55,000.2. Direct materials issued for $67,000.3. Indirect materials issued for $10,000.4. Total Payroll
Direct Labour $26,400 Indirect labour $6,400 Sales salaries $2,800 Office salaries $2,300
5. Materials returned to suppliers for $950.6. Payroll paid after deducting 15% income tax payable.7. Sundry manufacturing overhead incurred 32,000.8. Factory overhead applied at the rate of $5 per hour and number of
direct labour hours are 4,400.9. Goods finished during the month for $97,520.10. Goods sold costing $114,000 and sales value $142,500.Required: Record journal entries for above
transactions.