Do It! Review 15-01 During the current month, Wacholz Company incurs the following manufacturing costs. (a) Purchased raw materials of $17,500 on account. (b) Incurred factory labor of $41,500. Of that amount, $32,400 relates to wages payable and $9,100 relates to payroll taxes payable. (c) Factory utilities of $3,400 are payable, prepaid factory property taxes of $2,640 have expired, and depreciation on the factory building is $8,400. Prepare journal entries for each type of manufacturing cost.

Item (a)

Debit : Raw Materials Item $17,500

Credit : Accounts Payable  $17,500

Item (b)

Debit : Work in Process - Factory Wages $41,500

Credit : Wages Payable $41,500

Item (c)

Debit : Factory Utilities $3,400

Credit : Accounts Payable $3,400

Item (d)

Debit : Work in Process - Property taxes $2,640

Credit : Prepaid Property taxes $2,640

Item (e)

Debit : Work in Process - Depreciation expense $8,400

Credit : Accumulated depreciation $8,400

Explanation:

When no immediate payment of cash is made for a cost incurred, we raise a Liability - Accounts Payable.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.