PRODUCT COSTDM Qt 10Unit Cost $ 25.00 Unit DM Cost $ 250.00

DL Hrs 20Labor Rate / Hr $ 20.00 Unit DL Cost $ 400.00

Est. OH Cost $ 500,000.00 Est. Labor Hrs 200,000POHR $ 2.50 Unit OH Cost $ 50.00

Unit Product Cost $ 700.00

Selling Price $ 2,100.00

Journal EntriesDr. Cr.

1 Cash 2,500,000 Common Stock 2,500,000

2 Raw Material Inventory $ 2,750,000 Accounts Payable $ 2,750,000

3 Work In Process $ 2,500,000 Raw Material Inventory $ 2,500,000

4 Work In Process $ 4,200,000 Wages Payable $ 4,200,000

5 Work In Process $ 525,000 Manufacturing Overhead $ 525,000

6 Finished Goods $ 7,000,000 Work In Process $ 7,000,000

7 Accounts Receivable $ 18,900,000 Sales Revenue $ 18,900,000

Cost of goods sold $ 6,300,000 Finished Goods $ 6,300,000

8 Manufacturing Overhead $ 550,000 Cash $ 350,000 Accumulated Depreciation $ 200,000

9 Cost of goods sold $ 25,000 Manufacturing Overhead $ 25,000

10 Selling Expenses $ 945,000 Cash $ 945,000

11 Office Expenses $ 100,000 Cash $ 100,000

PERMANENT ACCOUNTSCash Accts Receivable Raw Materials Inv.

2,500,000 350,000 18,900,000 2,750,000945,000100,000

18,900,000 250,000

1,105,000

Accd Depre. Accts Payable Wages Payable200,000 2,750,000

200,0002,750,000

TEMPORARY ACCOUNTSSales Cost of Goods Sold Selling Expenses

18,900,000 $ 6,300,000 945,000 $ 25,000 945,000

18,900,000 6,325,000

PERMANENT ACCOUNTSRaw Materials Inv. WIP Inv. Finished Goods Inv.

2,500,000 2,500,000 7,000,000 7,000,000 6,300,0004,200,000

525,000700,000

225,000

Wages Payable Common Stock Retained earnings4,200,000 2,500,0004,200,000

2,500,000

TEMPORARY ACCOUNTSSelling Expenses Office Expenses

100,000

100,000

PERMANENT ACCOUNTSManufacturing OH550,000 525,000

$ 25,000

Equipment

TEMPORARY ACCOUNTS

Account Dr. Cr.Cash 1,105,000 Cost of Goods Manufactured StatementAccounts Receivable 18,900,000 For the Year Ended 2013Raw Materials Inventory 250,000 Direct Materials:Work-In-Process Inventory 225,000 Raw Materials Inv., Beg.Finished Goods Inventory 700,000 Add: Purchases of Raw MaterialsAcc. Depreciation 200,000 Less: Raw Materials Inv., End.Accounts Payable 2,750,000 Raw Materials used in productionWages Payable 4,200,000Common Stock 2,500,000 Direct LaborSales 18,900,000 Applied Manufacturing OHCost of Goods Sold 6,325,000 Total Manufacturing CostsSelling Expenses 945,000 Add: Beg. WIPOffice Expenses 100,000 Less: End. WIPTOTAL $ 28,550,000 $ 28,550,000 Cost of Goods Manufactured

Income Statement Cost of Goods Sold StatementFor the Year Ended 2013 For the Year Ended 2013

Sales 18,900,000 Finished Goods Inv. Beg.Less: Cost of Goods Sold 6,325,000 Add: Cost of Goods ManufacturedGross Margin 12,575,000 Less: Finished Goods Inv. End.

Unadjusted Cost of Goods SoldSelling Expenses 945,000Office Expenses 100,000 1,045,000 Adjusted Cost of Goods Sold

Net Income 11,530,000

JHJ BookstoreStatement of Retained Earnings

For the Year Ended 2013Beginning R/E $ - Add Net Income 11,530,000Less Dividends $ - Ending R/E 11,530,000

Balance SheetAs of December 31, 2013

Assets: Liabilities & Owner's Equity:Cash $1,105,000 Accounts Payable

Add: Underapplied OH or Deduct: Oveapplied OH

Accounts Receivable $18,900,000 Wages PayableRaw Materials Inventory $250,000 Total LiabilitiesWork-In-Process Inventory $225,000 Finished Goods Inventory $700,000 Common StockAcc. Depreciation ($200,000) Retained EarningsTotal Assets $20,980,000 Total Liabilities & Shareholder's Equit

Cost of Goods Manufactured StatementFor the Year Ended 2013

Direct Materials:Raw Materials Inv., Beg. $ - Add: Purchases of Raw Materials $ 2,750,000 Less: Raw Materials Inv., End. ($250,000)Raw Materials used in production $ 2,500,000

Direct Labor $ 4,200,000 Applied Manufacturing OH $ 525,000 Total Manufacturing Costs 7,225,000Add: Beg. WIP $ - Less: End. WIP $ (225,000)Cost of Goods Manufactured $ 7,000,000

Cost of Goods Sold StatementFor the Year Ended 2013

Finished Goods Inv. Beg. $ - Add: Cost of Goods Manufactured $ 7,000,000 Less: Finished Goods Inv. End. $ (700,000)Unadjusted Cost of Goods Sold $ 6,300,000

$ 25,000 Adjusted Cost of Goods Sold $ 6,325,000

Balance SheetAs of December 31, 2013

Liabilities & Owner's Equity:Accounts Payable $2,750,000

Add: Underapplied OH or Deduct: Oveapplied OH

Wages Payable $4,200,000Total Liabilities $6,950,000

Common Stock $2,500,000 Retained Earnings $11,530,000 Total Liabilities & Shareholder's Equit $20,980,000