Bergamo Bay's computer system generated the following trial balance on December 31, 2017. The company's manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Payroll Payable) has not been recorded.
Debit Credit
Cash $66,000
Accounts receivable 44,000
Raw materials inventory 27,000
Work in process inventory 0
Finished goods inventory 9,000
Prepaid rent 3,000
Accounts payable $9,900
Notes payable 12,900
Common stock 30,000
Retained earnings 82,000
Sales 182,200
Cost of goods sold 102,000
Factory overhead 25,000
Operating expenses 41,000
Totals $317,000 $317,000
After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.
Materials requisition 21-3010: $4,300direct materials to Job 402
Materials requisition 21-3011: $7,300direct materials to Job 404
Materials requisition 21-3012: $1,800indirect materials
Labor time ticket 6052: $7,000direct labor to Job 402
Labor time ticket 6053: $5,000direct labor to Job 404
Labor time ticket 6054: $4,000indirect labor
Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 150% of direct labor cost.
Prepare a revised trial balance
Prepare a balance sheet as of December 31, 2017.
Prepare an income statement for 2017

Bergamo Bay's Computer System

a) Revised Trial Balance on December 31, 2017:

                                                                   Debit                   Credit

Cash                                                          $32,000

Accounts receivable                                   44,000

Raw materials inventory                             13,600

Work in process inventory                        47,400

Finished goods inventory                           9,000

Prepaid rent                                                 3,000

Accounts payable                                                                    $9,900

Notes payable                                                                          12,900

Common stock                                                                        30,000

Retained earnings                                                                   82,000

Sales                                                                                       182,200

Cost of goods sold                                102,000

Factory overhead                                   25,000

Operating expenses                               41,000

Totals                                                   $317,000                $317,000

b) Balance Sheet as of December 31, 2017:

Assets:

Cash                                                      $32,000

Accounts receivable                               44,000

Raw materials inventory                         13,600

Work in process inventory                     47,400

Finished goods inventory                       9,000

Prepaid rent                                             3,000

                                                          $149,000

Accounts payable                                 $9,900

Notes payable                                       12,900

Common stock                                     30,000

Retained earnings                                96,200

                                                          $149,000

c) Income Statement for 2017:

Sales                                                                $182,200

less Cost of Goods Sold              102,000

less Factory Overhead                 25,000       127,000

Gross Profit                                                       55,200

Less Operating Expenses                               41,000

Net Income                                                      14,200                              

Explanation:

a) Prepared Trial Balance on December 31, 2017:

                                                                       Debit                   Credit

Cash                                                          $66,000

Accounts receivable                                   44,000

Raw materials inventory                            27,000

Work in process inventory                          0

Finished goods inventory                           9,000

Prepaid rent                                                 3,000

Accounts payable                                                                    $9,900

Notes payable                                                                          12,900

Common stock                                                                        30,000

Retained earnings                                                                   82,000

Sales                                                                                       182,200

Cost of goods sold                                102,000

Factory overhead                                   25,000

Operating expenses                               41,000

Totals                                                   $317,000                $317,000

b) Raw Materials Inventory

As per Trial Balance                           $27,000

less Job 402 materials                         (4,300)

less Job 404 materials                         (7,300)

less indirect materials                           (1,800)

Adjusted Raw Materials Inventory  $13,600

c) Work in Process:

As per Trial Balance                 $0

add Job 402 materials              4,300

add Job 404 materials              7,300

add indirect materials                1,800

add Job 402 labor                    7,000

add Job 404 labor                    5,000

add indirect labor                     4,000

Work in Process Overhead    18,000

Adjusted Work in Process  $47,400

d) Cash Balance:

As per Trial Balance               $66,000

Work in Process Labor            (16,000)

Work in Process Overhead     (18,000)

Adjusted Cash balance         $32,000

e) Retained Earnings          

 Opening Balance  $82,000

  add Net Income      14,200

Ending Balance    $96,200