Question:Gateway produces electronic calculators. Suppose Gateway’s standard cost per calculator is \(25 for direct materials and \)68 for conversion costs. The following data applyto August activities:

Direct materials purchased (on account) \( 8,300

Conversion costs incurred 20,500

Number of calculators produced 300 calculators

Number of calculators sold (on account, at \)105 each) 295 calculators

Requirements

1. Prepare summary journal entries for August using JIT costing, including the entryto adjust the Conversion Costs account.

2. The beginning balance of Finished Goods Inventory was $1,300. Use a T-accountto find the ending balance of Finished Goods Inventory.

Date

Description

Debit

Credit

Trans. 1

Raw and In-Process Inventory

$ 8,300

Accounts Payable

$ 8,300

Being inventories purchased on credit

Trans. 2

Conversion Costs

$20,500

Labor and overheads cost payable

$20,500

Being conversion cost incurred

Trans. 3

Finished goods inventory

$27,900

Raw and In-process inventory

$7,500

Conversion Costs

20,400

Being completed 15,000 goods transferred to the finished inventory account at standard cost

Trans. 4

Accounts Receivables

$ 30,975

Sales Revenue

$ 30,975

Being goods sold on credit

Trans. 5

Cost of goods sold

$27,435

Finished goods inventory

$27,435

Being cost of goods sold for sold units at standard cost

Trans. 6

Cost of goods sold

$ 100

Conversion cost

$ 100

Being under-allocated conversion cost transferred to cost of goods sold account

Date

Particular

Amount

Date

Particular

Amount

Aug 1

Opening balance

$1,300

Tran 5

Cost of goods sold

$27,435

Tran 3

Raw and In-process Inventory

$7,500

Aug 31

Closing Balance

$1,765

Tran 3

Conversion Cost

$20,400

$29,200

$29,200