Question - Given

Oct 1. Borrowed $130,000 from ABC Bank on a note payable.

Oct 1. Purchased 5,000 square feet of oak on account at $25 per square foot.

Oct 2. Purchased 50 gallons of glue on account at $36 per gallon (indirect material).

Oct 4. Requisitioned 3,500 square feet of oak and 30.5 gallons of glue for production.

Oct 15. Paid factory utility bill, $15,230 in cash.

Oct 20. Received a bill for November's insurance cost for the manufacturing property and equipment, $3,500. This amount has not yet been paid.

Oct 25. Incurred Research & Development expense on account, $4,500.

Oct 28. Incurred factory payroll costs of $187,900 (not yet paid). Of this amount, $46,000 were indirect labor costs; direct labor personnel earned $22 per hour.

Oct 29. Incurred and paid other factory overhead costs, $13,400.

Oct 29. Incurred selling and administrative expenses on account, $13,510.

Oct 30. Declared and paid a $1,200 cash dividend.

Oct 31. Record $8,200 of depreciation on manufacturing equipment for October.

Oct 31. Allocated factory overhead to production on the basis of direct labor- hours.

Oct 31. Completed goods costing $146,000 manufactured during the month.

Oct 31. Sales on account in October were $132,200. The cost of goods sold was $112,000.

Oct 31. Recorded $2,300 depreciation on office equipment for October.

Oct 31. Customers paid $100,500 on account.

Oct 31. Paid payroll, $186,000.

Oct 31. Paid accounts payable, 49,000.

Oct 31. Prepaid insurance expired, 4,000.

Oct 31. Interest accrued is $100.

Oct 31. Calculate the overallocated or underallocated overhead and close this amount to the Cost of Goods Sold account.

Required

1. Compute the firm's factory overhead allocation rate for the year.

2. Prepare journal entries to record October transactions.

3. Post the journal entries to the appropriate general ledger accounts.

4. Prepare a trial balance for October.

6. Prepare a multiple-step income statement and a classified balance sheet for October.