Homework 9

The following account balances were taken from the records of Colin Company at the beginning of 2011:

            Cash                                                                            $2,500            

            Common stock                                                                        $2,250

            Retained earnings                                                           $950

            Raw materials inventory                                                 $300

            Work in process inventory                                              $220

            Finished good inventory (50 units @ $3.60/unit)                        $180

The following transactions occurred during 2011:

1.      Purchased $750 of raw materials with cash

2.      Transferred $500 of raw materials to the production department.

3.      Incurred and paid cash for 80 hours of direct labor at $7.50 per hour.

4.      Applied overhead using a predetermined overhead rate of $8.00 per direct labor hour.

5.      Incurred actual overhead costs of $650 cash.

6.      Completed work on 300 units for $3.40 per unit.

7.      Paid $200 in selling and administrative expenses in cash.

8.      Sold 200 units for $1,500 cash.  Assume FIFO inventory or the first units completed are the first units sold to customers.

Required:

1. Trace the flow of inventory for these transactions using Row Material, Work in Process, Finished Goods, COGS and Manufacturing OH T accounts.  Exclude the cash account.
2. Prepare an income statement for 2011.