Question

Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows.

Purchased raw materials on credit, $200,000.
Materials requisitions record use of the following materials for the month.

Job 136 $ 48,000
Job 137 32,000
Job 138 19,200
Job 139 22,400
Job 140 6,400
Total direct materials 128,000
Indirect materials 19,500
Total materials used $ 147,500

Paid $15,000 cash to a computer consultant to reprogram factory equipment.
Time tickets record use of the following labor for the month. These wages were paid in cash.

Job 136 $ 12,000
Job 137 10,500
Job 138 37,500
Job 139 39,000
Job 140 3,000
Total direct labor 102,000
Indirect labor 24,000
Total $ 126,000

Applied overhead to Jobs 136, 138, and 139.
Transferred Jobs 136, 138, and 139 to Finished Goods.
Sold Jobs 136 and 138 on credit at a total price of $525,000.
The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building $ 68,000
Depreciation of factory equipment 36,500
Expired factory insurance 10,000
Accrued property taxes payable 35,000

Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

2. Prepare journal entries to record the events and transactions a through i.

please do not make any mistake on the assignment

Answer 1

Ans- Preparing journal entries to rcecord the events and transactions a through i:-

Transaction	General Journal	Debit ($)	Credit ($)
a.	Raw material inventory A/c Dr.	200,000
	To Accounts payable A/c		200,000
	(To record raw material purchased on credit)
b.	WIP Inventory A/c Dr.	128,000
	Factory Overhead A/c Dr.	19,500
	To Raw Materials Inventory A/c		147,500
	(To record factory overhead)
c.	Factory Overhead A/c Dr.	15,000
	To Cash A/c		15,000
	(To Factory overhead paid in cash)
d.	WIP Inventory A/c Dr.	102,000
	Factory Overhead A/c Dr.	24,000
	To Cash A/c		126,000
	(To record direct and indirect labor)
e.	WIP Inventory A/c Dr.	177,000
	To Factory Overhead A/c		177,000
	(To apply overhead to jobs)
f.	Finished Goods Inventor A/c Dr.	355,100
	To WIP Inventory A/c		355,100
	(To record completion of job)
g.	Accounts Receivable A/c Dr.	525,000
	To Sales A/c		525,000
	(To record sales on account)
	Cost of goods sold A/c Dr.	215,700
	To Finished Goods Inventory A/c		215,700
	(To record cost of goods sold)
h.	Factory Overhead A/c Dr.	149,500
	To Accumulated Depreciation-Factory Building A/c		68,000
	To Prepaid Insurance A/c		10,000
	To Property Taxes Payable A/c		35,000
	To Accumulated Depreciation-Fcatory Equipment A/c		36,500
	(To record the factory overhead)
i.	WIP Inventory A/c Dr.	27,000
	To Factory Overhead A/c		27,000
	(To apply overhead to jobs)

Working Note:-

e. To apply overhead to jobs -($24,000+$75,000+$78,000_=$177,000

f.To record completion of jobs-($84,000+$131,700+ $139,400)= $355,100

g. To record cost of sales- ($84,000+$131,700)=$215,700

i. To apply overheads to job-($21,000+$6,000)= $27,000