Question

Mertz Company employs a job cost system. As of January 1, 2019, its records showed the following inventory balances:

Materials	$31,500
Work in process	56,500
Finished goods (30,000 units @ $3)	90,000

The work in process inventory consisted of two jobs:

	Direct	Direct	Manufacturing
Job No.	Materials	Labor	Overhead	Total
378	$7,000	$12,000	$ 6,000	$25,000
379	9,000	15,000	7,500	31,500
	$16,000	$27,000	$13,500	$56,500

Summarized below are the production and sales data for the company for 2019:

1.      Materials purchased $95,000
2.      Materials requisitioned: direct materials for Job No. 378, $16,000; for Job No. 379, $32,000; and Job No. 380, $36,000; supplies (indirect materials) requisitioned, $4,500.
3.      Factory payroll distributed: direct labor to Job No. 378, $30,000; to Job No. 379, $45,000; and to Job No.380, $60,000; indirect labor, $15,000
4.      Manufacturing overhead is assigned to work in process at $0.50 per dollar of direct labor (the same rate as in 2018)

5.      Job Nos. 378 and 379 were completed
6.      Factory indirect costs (other than indirect labor and indirect materials); depreciation, $7,000; heat, light, and power, $3,000; and miscellaneous, $5,000.
7.      Sales for the year amounted to $320,000; cost of goods sold, $197,000.

Required:

Use T-accounts to illustrate the journal entries for the above summarized transactions.

Answer 1

Materials
Beg. Bal.	$    31,500.00	2)	$ 88,500.00
1)	$    95,000.00
End. Bal.	$    38,000.00

Work in Process (WIP)
Beg. Bal.	$    56,500.00	5)	$ 2,17,000.00
2)	$    84,000.00
3)	$ 1,35,000.00
4)	$    67,500.00
End. Bal.	$ 1,26,000.00

Factory Overhead (F.OH)
2)	$   4,500.00	4)	$ 67,500.00
3)	$ 15,000.00
6)	$ 15,000.00

Finished Goods (FG)
Beg. Bal.	$    90,000.00	7)	$ 1,97,000.00
5)	$ 2,17,000.00
End. Bal.	$ 1,10,000.00

Cost of Goods Sold (COGS)
7)	$ 1,97,000.00		$                  -

Sales
	$                  -	7)	$ 3,20,000.00

Particulars		Job 378	Job 379	Job 380
Beginning balances:
Direct Materials		$   7,000.00	$      9,000.00
Direct Labor		$ 12,000.00	$    15,000.00
Manufacturing Overhead	$   6,000.00	$      7,500.00
Total		(A)	$ 25,000.00	$    31,500.00
Current period costs:
Direct Materials		$ 16,000.00	$    32,000.00	$    36,000.00
Direct Labor		$ 30,000.00	$    45,000.00	$    60,000.00
Manufacturing Overhead	$ 15,000.00	$    22,500.00	$    30,000.00
Total		(B)	$ 61,000.00	$    99,500.00	$ 1,26,000.00
Total Costs	(A+B)	$ 86,000.00	$ 1,31,000.00	$ 1,26,000.00
Status			Complete	Complete	In process