Zap Rap, Inc., is a manufacturer of audio CDs. The company’s chief financial officer is trying to verify the accuracy of the December 31 work in process and finished goods inventories prior to the closing the books for the year. he strongly suspects that the year-end dollar blances are incorrect, but he believes that all the other data are accurate. the year-end blanaces shown on Zap Rap’s books arae as follows:
|Work in process, Dec. 31 (materials 100% complete; conversion 50% complete||30,000||$95,000|
|Finished Goods, Dec 31||50,000||$201,000|
There were no finished goods inventories at teh beginning of the year. The company uses the weighted-average method of processing costing. There is only one processing department. A review of the company’s inventory and cost records has disclosed the following data:
|Work in process, Jan 1 (materials 100% complete; conversion 80% complete)||20,000||$22,000||$48,000|
|Started into production||800,000|
|Costs added during the year||$880,000||$2,367,000|
|Units completed during the year||790,000|
1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year.
2. Determine the amount of cost that should be assigned to the ending work in process and finsihed goods inventories.
3. Prepare the necessary correcting journal entry to adjust the work in process and finished foods inventories to the correct balances as of December 31.
4. Determine the cost of goods sold for the year, assuming that there is no underapplied or overapplied overhead.