Cost of Goods Manufactured Direct Materials: Beginning Raw Inventory 1,000 Add: Purchase of Raw Materials 1,000 2,000

Raw Materials Available for Use Deduct: Ending Raw Inventory 500 Raw Materials Used in Production (Deduct: Indirect materials included in Man OH) Direct Labor Manufacturing Overhead Total Manufacturing Cost Add: Beginning Work in Process Deduct: Ending Work in Process Cost of Goods Manufactured

1,500 3,000 4,000 8,500 500 9,000 1,000 8,000

Cost of Goods Sold Beginning Finished Goods Inventory Add: Cost of Goods Manufactured Goods available for sale Deduct: Ending Finished Goods Inventory Unadjusted Cost of Goods Sold Add: Underapplied overhead Adjusted Cost of Goods Sold COGS = Beg Finished Goods + COGM End Finished Goods COGS (merchandising) = Beg Inventory + Purchases End Inventory

1,000 2,000 3,000 1,500 1,500 500 2,000

Net Operating Income Sales Cost of Goods Sold Gross Margin Selling and Administrative expenses: Selling Expenses Administrative Expenses Net Operating Income

10,000 2,000 8,000 1,500 1,500

3,000 5,000

Net Operating Income = Sales COGM + Change in FG Selling & Administrative Expenses

1. Raw Materials Purchased Raw Materials$ Accounts Payable.$ 2. Direct and Indirect materials issued into production Work in Process...$ Manufacturing Overhead....$ 3. Direct and Indirect factory labor cost incurred Work in Process...$ Manufacturing Overhead....$ Salaries and Wages Payable..$ 4. Utilities and other factory costs incurred Manufacturing Overhead.$ Accounts Payable...$ 5. Property taxes and insurance incurred on the factory Manufacturing Overhead...$ Property Taxes Payable....$ Prepaid Insurance....$ 6. Depreciation recorded on factory assets Manufacturing Overhead......$ Accumulated Depreciation....$

7. Overhead cost applied to Work in Process Work in Process...$ Manufacturing Overhead.$ 8. Administrative salaries expense incurred Salaries Expense..$ Salaries and Wages Payable..$ 9. Depreciation recorded on office equipment Depreciation Expense....$ Accumulated Depreciation....$ 10. Advertising and other selling and administrative expenses incurred Advertising Expense.$ Other Selling and Administrative Expense..$ Accounts Payable...$ 11. Cost of goods manufactured transferred to finished goods Finished Goods.$ Work in Process...$ 12. Sale of Job A recorded Accounts Receivable.$ Sales..$ 13. Cost of goods sold recorded for Job A Cost of Goods Sold....$ Finished Goods..$