Quickie Company Recently Implemented a JIT System and Is Considering

question 113

Essay

Quickie Company recently implemented a JIT system and is considering implementing a backflush costing system. Following are the transactions for the first quarter of the year.
1.Purchased raw materials on account for $375,000.
2.All materials were received and placed into production.
3.Actual labour costs of $75,000 were incurred.
4.Actual overhead costs of $425,000 were incurred.
5.Conversion costs of $480,000 were applied to production as conversion costs are recognized quarterly.
6.All work was completed for the month.
7.All completed work was sold.
8.The difference between applied costs and actual costs was determined.
1.Prepare journal entries using variation 2 of back flush costing.
2.Prepare journal entries using variation 4 of back flush costing.

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Definitions:

Adjusting Entry

A financial record created at the close of an accounting period to assign earnings and expenses to the time they truly took place.

Interest Receivable

This represents the amount of interest income that has been earned but not yet received in cash by the company.

Adjusting Entry

Accounting records created at the closing of an accounting cycle to distribute revenues and costs to the period they truly belong.

Interest Revenue

Income earned by an entity from lending money or from investments in interest-bearing assets like bonds, savings accounts, or loans.