Question

Job Cost Flows, Journal Entries

On April 1, Sangvikar Company had the following balances in its inventory accounts:

Materials Inventory	$12,720
Work-in-Process Inventory	21,350
Finished Goods Inventory	8,700

Work-in-process inventory is made up of three jobs with the following costs:

	Job 114	Job 115	Job 116
Direct materials	$2,804	$2,640	$3,650
Direct labor	1,800	1,560	4,300
Applied overhead	1,080	936	2,580

During April, Sangvikar experienced the transactions listed below.

1. Materials purchased on account, $28,000.
2. Materials requisitioned: Job 114, $16,500; Job 115, $12,400; and Job 116, $5,000.
3. Job tickets were collected and summarized: Job 114, 150 hours at $15 per hour; Job 115, 220 hours at $17 per hour; and Job 116, 80 hours at $18 per hour.
4. Overhead is applied on the basis of direct labor cost.
5. Actual overhead was $4,765.
6. Job 115 was completed and transferred to the finished goods warehouse.
7. (1) Job 115 was shipped, and (2) the customer was billed for 125 percent of the cost.

Required:

1. Prepare journal entries for the April transactions.

a.
b.
c.
d.
e.
f.
g (1).
g (2).

2. Calculate the ending balances of each of the inventory accounts as of April 30. Post the entries to the T-accounts in the same order in which they were journalized.

Materials

Work in Process

Finished Goods

Answer 1

OH rate as % of DLC:
Total OH allocated in Job 114			1080
Divide: DLC of Job 114			1800
OH rate as % of DLC:			60%
Job cost Sheet:
			114	115	116
Beginning Inventory			5684	5136	10530
Current cost
Material			16500	12400	5000
Labour			2250	3740	1440
Overheads			1350	2244	864
Total cost			25784	23520	17834
Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Raw materiall Inventory				28000
	Accounts Payable					28000
b.	Work in process Inventory				33900
	Raw material inventory (16500+12400+5000).					33900
c.	Work in process inventory				7430
	Wages payable		(150*15+220*17+80*18)			7430
d.	Work in process inventory				4458
	Manufacturing overheads (7430*60%)					4458
e.	Manufacturing Overheads				4765
	Accounts Payable					4765
f.	Finished Goods inventory				23520
	Work in process invenotry					23520
g.	Cost of good ssold				23520
	Finished Goods inventory					23520
	Accounts receivable				29400
	Sales revenue (23520*125%)					29400
Raw material
balance		12,720	Work in process		33,900
Accounts Payable		28,000
Ending balance		6,820
Work in process inventory
Balance		21,350	Finished Goods		23,520
Raw material Inv.		33,900
Wages Payable		7,430
Manufacturing Overheads		4,458
Balance		43,618
Finished Goods Inventory
Balance		8,700	Cost of goods sold		23,520
Work in process inv.		23,520
Ending balance		8,700