Theater Staging, Inc., assembles light and sound equipment for installation in various entertainment facilities. An inventory of material and equipment is on hand at all times so that installation could start as quickly as possible. Special equipment has been ordered as required. On September 1, the Materials and Equipment Inventory account had a $48,000 balance. The Work-in-Process Inventory account is maintained to record the costs of installation work not yet I complete. There were two such jobs on September 1, with the following costs:
Overhead has been applied at 15 percent of the costs of material and equipment installed. During September, two new installations were begun. Additional work was done on jobs 106 and 111, with the latter completed and billed to Starlight Theater. Details on the costs incurred on jobs during September follow:
Other Period Events
¢ Received $25,000 payment on job 111, which was delivered to the customer.
¢ Purchased material and equipment for $18,700.
¢ Billed Starlight Theater $180,000 and received payment for half of that amount.
¢ Determined that payroll for support personnel totaled $1,300.
¢ Issued supplies and incidental installation material for current jobs costing $310.
¢ Recorded overhead and advertising costs for the installation operation as follows (all cash except equipment depreciation):
Required
a. Prepare journal entries to record the flow of costs for the installation operation during September.
b. Calculate the amount of over- or under applied overhead for the month. This amount is closed to Cost of Goods Sold.
c. Determine inventory balances for Material and Equipment Inventory and Work-in-Process Inventory.
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