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Chapter 10 Answer Key True or False
Chapter 10 Answer Key True or False
TRUE OR FALSE
1. T
2. T
3. F
4. F
5. F
6. T
7. F
8. T
9. F
10. T
11. T
12. F
13. F
14. F
15. F
16. F
17. F
18. T
19. F
20. T
21. T
22. T
23. F
24. F
25. T
26. T
27. F
28. F
29. F
30. T
31. T
32. F
33. T
34. T
35. T
36. T
37. T
38. T
39. T
40. T
41. F
42. T
Multiple Choice
1. D
2. D
3. B
4. E
5. C
6. B
7. D
8. C
9. C
10. C
11. B
12. C
13. B
14. A
15. A
16. D
17. D
18. A
19. A
20. A
21. A
22. C
23. C
24. C
25. B
26. B
27. A
28. A/D/C
29. C
30. C
31. B/A/A/A
32. D
33. B
34.
Straight Problems
Problem 1
Solution:
Requirement 1 Requirement 2
500,00 500,00
1 RIP inventory 0 RIP inventory 0
500,00
Accounts Payable 0 Accounts Payable 500,000
To record purchased of
materials To record purchased of materials
2 No Entry No Entry
250,00 250,00
3 Conversion cost – actual 0 Conversion cost - actual 0
700,00
4 Finished Goods 0 No entry
500,00
RIP inventory (100k x P5) 0
Conversion cost- applied 200,00
(100K x P2) 0
To record cost of completed
transaction
700,00 700,00
Cost of goods sold 0 Cost of goods sold 0
700,00
Finished goods 0 RIP inventory (100k x P5) 500,000
To record cost of 100k units Conversion cost- applied
sold at P5 (100K x P2) 200,000
The ledger accounts in respect of the above transactions show the following balances:
RIP inventory 0
Finished goods 0
Conversion cost – under applied 50,000
Problem 2
Solution:
Requirement 1 Requirement 2
1 RIP inventory 8,470,000 RIP inventory 8,470,000
Accounts Payable 8,470,000 Accounts Payable 8,470,000
To record purchased of
To record purchased of materials materials
2 Conversion cost - actual 6,748,000 Conversion cost - actual 6,748,000
Accrued payroll 2,695,000 Accrued payroll 2,695,000
Various Accounts 4,053,000 Various Accounts 4,053,000
To record conversion cost To record conversion cost
incurred incurred
3 Finished goods 15,120,000 No entry
RIP inventory (420K x P20) 8,400,000
Conversion cost - applied
(420K x P16) 6,720,000
To record completed units
FG (7K x P36) 252,000
COGS (413K x P36) 15,120,000
RIP inventory
(420K x P20) 8,400,000
Conversion cost - applied
4 COGS (413,000 x P36) 14,868,000 (420K x P16) 6,720,000
To record the application of RIP
Finished goods 14,868,000 and CC to COGS
To record units sold
COGS 28,000
under applied Conversion
cost 28,000
(6,748,000 - 6,720,000)
To record adjustment of COGS
due to variance
The ledger accounts in respect of the above transactions show the following balances:
RIP inventory 70,000
Finished goods 252,000
Conversion cost – under applied 28,000
Problem 3
Solution:
Traditional JIT
1 Materials 880,000 RIP inventory 880,000
Accounts Payable 880,000 Accounts Payable 880,000
Work in Process
2 Inventory 850,000 No entry
Materials 850,000
Conversion cost account -
3 Payroll 100,000 Actual 422,000
Accrued Payroll 100,000 Accrued Payroll 100,000
Various Accounts 322,000
Work in Process
Inventory 100,000
Payroll 100,000
Factory Overhead
4 Control 322,000
Various Accounts 322,000
5 Work in Process 300,000 No entry
Inventory
Factory overhead applied 300,000
1,250,00 1,250,00
6 Finished goods 0 Finished goods 0
1,250,00
work in Process 0 RIP 850,000
Conversion cost - applied 400,000
1,190,00
COGS 0
1,190,00 1,190,00
Finished goods 0 COGS 0
Finished goods 1,190,000
Note: Trigger points determine when entries are recorded in the accounting system.
The ledger accounts in respect of the above transactions show the following balances:
RIP inventory 30,000
Finished goods 60,000
Conversion cost – under applied 22,000
Problem 4
Solution:
Transaction Traditional Backflush Costing
1. Purchase of
materials Materials 96,000 COGS 96,000
Accounts Payable 96,000 Materials 96,000
(24,000 units x P4)
2. Incurrence of
conversion costs Conversion Costs 192,000 COGS 192,000
Various Accounts 192,000 Various Accounts 192,000
(24,000 units x P8)
3. Completion of
production WIP Inventory 288,000 No Entry
Materials 96,000
Conversion Costs 192,000
Finished Goods
Inventory 288,000
WIP Inventory 288,000
Sales for the month Accounts Receivable 474,000 Accounts Receivable 474,000
Sales 474,000 Sales 474,000
(23,700 units x P20) (23,700 units x P20)
Finished Goods
COGS Inventory 3,600
Finished Goods
Inventory 284,400 COGS 3,600
To record backlashing of costs to FG
(23,700 x P12) 284,400 Inventories)
Problem 5
1. Purchased of Materials RIP Inventory 2,416,000
Accounts Payable 2,416,000
Finished Goods
4. To Record Finished goods Inventory 7,200,000
RIP Inventory 7,200,000
(600,000 x P12)
Or Alternative Entry
RIP Inventory 16,000
FG Inventory 48,000
COGS 7,216,000
Accounts Payable 2,416,000
Conversion Costs 4,864,000
Problem 6
Answer
RIP Inventory 375,000
AP 375,000
Problem 7
Answer
1.
1 RIP Inventory 906,000
AP 906,000
4 FG Inventory 2,700,000
RIP Inventory 2,700,000
(450,000 x 6)
5 COGS 2,682,000
FG Inventory 2,682,000
(447,000 x 6)
Cash 5,364,000
Sales 5,364,000
(447,000 x 12)
Over Applied Conversion Cost 5,000
COGS 5000
2.
2 Trigger Points
1 NE
2 Same
3 NE
5 same
3.
1 Trigger point
1 NE
2 Same
3 NE
4 NE