1) As of December 31, Charles Company had $12,000 in cash, held $95,000 of inventory and owned other items that originally cost $13,000. Charles company also had borrowed $40,000 from First City Bank.
Prepare a balance sheet for Charles Company as of December 31. Be sure to label each item and each column with appropriate terms.
2) Elliot Company estimated that costs of production for the coming year would be:
Raw materials $75,000
Direct Labor $90,000
Production Overhead $135,000
Calculate the overhead rate for the next year, assuming that it is based on direct labor dollars.
Journalize the entry necessary to show the total cost of production for the month of May if the raw materials put into production totaled $6.500 and direct labor was $6,600.
If actual production overhead cost incurred in May were $9,550, calculate the over absorbed overhead for the month.
Solution is provided in a separate Excel file attached.
Question No 1
As on 31 Dec 2010
Total current Assets $107,000
Property, Plant & Equipments: $0
Total Assets $107,000
Total Current Liabilities $0
Long term liabilities:
Loan from Bank $40,000
Total Liabilities $40,000
Total Owner's Equity $67,000
Total Liabilities & Owner's Equity $107,000
Owner's equity = Total Assets ...
The expert examines Elliot Company overhead rate for balance sheets.