For the year ended December 31, 2014, the job cost sheets of Cinta Company contained the following data.

Job
Number

Explanation

Direct
Materials

Direct
Labor

Manufacturing
Overhead

Total
Costs

7640

Balance 1/1

$25,000

$24,000

$28,800

$ 77,800

Current year”s costs

30,000

36,000

43,200

109,200

7641

Balance 1/1

11,000

18,000

21,600

50,600

Current year”s costs

43,000

48,000

57,600

148,600

7642

Current year”s costs

58,000

55,000

66,000

179,000

Other data:

  1. Raw materials inventory totaled $15,000 on January 1. During the year, $140,000 of raw materials were purchased on account.
  2. Finished goods on January 1 consisted of Job No. 7638 for $87,000 and Job No. 7639 for $92,000.
  3. Job No. 7640 and Job No. 7641 were completed during the year.
  4. Job Nos. 7638, 7639, and 7641 were sold on account for $530,000.
  5. Manufacturing overhead incurred on account totaled $120,000.
  6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labor $18,000, and depreciation on factory machinery $8,000.

Instructions

(a)Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. (Hint:Use a single T-account for Work in Process Inventory.) Calculate each of the following, then post each to the T-account: (1) beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed jobs.

(b)Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold.

(c)Determine the gross profit to be reported for 2014.