STACKED: A MANUFACTURING INVENTORY EXERCISE
CASE STUDY SOLUTION
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SYNOPSIS
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On December 6, 2023, Shirley Rose, Owner of Stacked, was reviewing the company’s financial
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performance for its fourth fiscal year, ending November 30, 2023. Stacked was a toy wooden block
manufacturer located in Stratford, Ontario, Canada. Rose needed to record all necessary accounting
transactions for fiscal 2023 using fiscal 2022’s statement of financial position, fiscal 2023’s list of cash
receipts and disbursements, and other related information provided in the exercise.
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OBJECTIVES
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• Identify cash vs non-cash transactions.
• Use the cash receipts and disbursements list to understand what has been recorded and determine what
needs to be adjusted based on the accrual method of accounting.
• Classify transactions as either product or period costs in a manufacturing company and allocate the
costs accordingly.
• Determine which costs should be allocated between the three types of inventory accounts: raw
materials, work-in-process, and finished goods.
The Case Solution Starts From page 4
,ASSIGNMENT
Record all unadjusted trial balances (opening balances and the list of cash receipts and disbursements),
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transactions, and adjusting entries required for Stacked’s fourth fiscal year ending November 30, 2022.
Closing entries are not required.
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ANALYSIS
All journal entry solutions for Stacked are provided in Exhibit -1.
The Case Solution Starts From page 4
, EXHIBIT -1: STACKED JOURNAL ENTRIES (IN CA$)
Entry Transaction Debit Credit
Opening Balances:
O/B Cash 5,044
Accounts receivable 9,112
Prepaid insurance 840
Prepaid rent 2,625
Raw materials, wood 1,691
Raw materials, paint 1,425
Raw materials, boxes 4,447
Work-in-process 209
Finished goods 15,544
Production supplies 428
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Delivery van 30,000
Accumulated depreciation, delivery van 13,500
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Office equipment 10,250
Accumulated depreciation, office equipment 2,325
Production equipment (leased) 21,676
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Accumulated depreciation, production equipment 10,839
(leased)
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Store equipment 8,000
Accumulated depreciation, store equipment 2,550
Accounts payable 4,274
Income tax payable 1,002
Lease interest payable 781
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Sales tax payable 1,205
Wages payable 4,960
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Lease obligation, production equipment 11,154
Common stock 70,000
Retained earnings 11,299
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Cash Receipts:
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[R] Cash 1,109,189
Sales revenue 440,388
Accounts receivable 251,551
Sales tax payable 57,250
Long-term portion, bank loan 360,000
The Case Solution Starts From page 4
CASE STUDY SOLUTION
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SYNOPSIS
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On December 6, 2023, Shirley Rose, Owner of Stacked, was reviewing the company’s financial
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performance for its fourth fiscal year, ending November 30, 2023. Stacked was a toy wooden block
manufacturer located in Stratford, Ontario, Canada. Rose needed to record all necessary accounting
transactions for fiscal 2023 using fiscal 2022’s statement of financial position, fiscal 2023’s list of cash
receipts and disbursements, and other related information provided in the exercise.
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tio
lu
OBJECTIVES
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• Identify cash vs non-cash transactions.
• Use the cash receipts and disbursements list to understand what has been recorded and determine what
needs to be adjusted based on the accrual method of accounting.
• Classify transactions as either product or period costs in a manufacturing company and allocate the
costs accordingly.
• Determine which costs should be allocated between the three types of inventory accounts: raw
materials, work-in-process, and finished goods.
The Case Solution Starts From page 4
,ASSIGNMENT
Record all unadjusted trial balances (opening balances and the list of cash receipts and disbursements),
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transactions, and adjusting entries required for Stacked’s fourth fiscal year ending November 30, 2022.
Closing entries are not required.
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m
Sa
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tio
lu
So
ANALYSIS
All journal entry solutions for Stacked are provided in Exhibit -1.
The Case Solution Starts From page 4
, EXHIBIT -1: STACKED JOURNAL ENTRIES (IN CA$)
Entry Transaction Debit Credit
Opening Balances:
O/B Cash 5,044
Accounts receivable 9,112
Prepaid insurance 840
Prepaid rent 2,625
Raw materials, wood 1,691
Raw materials, paint 1,425
Raw materials, boxes 4,447
Work-in-process 209
Finished goods 15,544
Production supplies 428
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Delivery van 30,000
Accumulated depreciation, delivery van 13,500
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Office equipment 10,250
Accumulated depreciation, office equipment 2,325
Production equipment (leased) 21,676
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Accumulated depreciation, production equipment 10,839
(leased)
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Store equipment 8,000
Accumulated depreciation, store equipment 2,550
Accounts payable 4,274
Income tax payable 1,002
Lease interest payable 781
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Sales tax payable 1,205
Wages payable 4,960
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Lease obligation, production equipment 11,154
Common stock 70,000
Retained earnings 11,299
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Cash Receipts:
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[R] Cash 1,109,189
Sales revenue 440,388
Accounts receivable 251,551
Sales tax payable 57,250
Long-term portion, bank loan 360,000
The Case Solution Starts From page 4
