Final answer:
Kimberly can organize her business costs by using T-accounts for RM Inventory, WIP Inventory, FG Inventory, and COGS. The ending balance for RM Inventory is $1,080, WIP Inventory is $30, FG Inventory is $480, and COGS is $2,740, with various transactions affecting each account.
Step-by-step explanation:
To provide Kimberly with an organized summary of her business costs, we'll start by setting up T-accounts for Raw Materials (RM) Inventory, Work-In-Process (WIP) Inventory, Finished Goods (FG) Inventory, and Cost of Goods Sold (COGS). Each account will record transactions affecting that account during the year, starting with any beginning balances. Here's how we'll record the transactions:
- RM Inventory: Begins with no balance as there's no mention of a starting inventory. We add the cost of new jeans ($960) and end with jeans still available ($120), making the ending balance $1,080.
- WIP Inventory: It begins with no balance as there are no partially completed jackets at the beginning of the year. We record the expenses related to the uncompleted jacket still attached to the machine ($30).
- FG Inventory: Begins with $400 (completed jackets from the prior year). We add the cost of all jackets that Kimberly completed and sold during the year except for one, which costs $80.
- COGS: This account records the cost of goods that have been sold. The cost associated with materials used immediately, such as thread, buttons, and patches ($290), labor costs ($1,790), and shipping costs as part of the sales transaction ($360) will be included here. COGS will also include the cost of finished goods sold, except for the one jacket remaining which is $400 (beginning inventory) + all costs except for the $80 (remaining unsold) and $120 (unsold jeans).
Let's calculate the end balances:
- RM Inventory: $960 (purchase of new jeans) + $120 (cost of jeans still available) - $0 (beginning balance) = $1,080 (ending balance).
- WIP Inventory: $0 (beginning balance) + $30 (cost of the uncompleted jacket) - $0 (sales) = $30 (ending balance).
- FG Inventory: $400 (beginning balance) + ($80 cost of one unsold jacket) - $0 (sales since no additional FG cost was added for the year) = $480 (ending balance).
- COGS: $290 (materials used up) + $1,790 (labor) + $360 (shipping) + $400 (cost of starting FG sold) - $80 (unsold jacket) - $120 (unsold jeans) = $2,740.
Therefore, the ending balance for RM Inventory is $1,080, WIP Inventory is $30, FG Inventory is $480, and COGS is $2,740.