Question

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,400, direct labor of $3,100, and applied overhead of $2,790. Custom Cabinetry applies overhead at the rate of 90% of direct labor cost. During July, Job 120 is sold (on account) for $32,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July.

July Product Costs	Job 120			Job 121			Job 122			Total
Direct materials	$	2,900		$	6,700		$	3,700		$	13,300
Direct labor		3,400			4,500			2,300			10,200
Overhead applied		?			?			?			?

1. Prepare journal entries for the following in July.

1. Direct materials used in production.
2. Direct labor used in production.
3. Overhead applied.
4. The sale of Job 120.
5. Cost of goods sold for Job 120.

2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Answer 1

	Job sheet			job 120	job121	job122	Total
	Beginning bal
	Direct materials			7,400			7,400
	Direct labor			3,100			3,100
	applied overhead			2,790			2,790
	Total beginning bal			13,290			13,290
	cost added during the year
	Direct materials			2,900	6,700	3,700	13,300
	Direct labor			3,400	4,500	2,300	10,200
	applied overhead			3060	4050	2070	9180
	total cost added during the year			9,360	15250	8070	32,680
	total cost of job			22,650	15250	8070	45,970
1)	Journal entries
	No.	General Journal				Debit	Credit
	a.	Work in process inventory				13,300
		Raw materials inventory					13,300
	b.	Work in process inventory				10,200
		factory wages payable					10,200
	c.	work in process inventory				9,180
		Manufacturing overhead					9,180
	d.	Account receivable				32,000
		Sales					32,000
	e.	Cost of goods sold				22,650
		Finished goods inventory					22,650
2)		Work in process inventory
	Beg bal	13,290	Finished	37,900
	a.	13,300	goods
	b.	10,200
	c.	9,180
	End bal	8,070
		Finished goods inventory
	Beg.bal	0	COGS	22,650
	WIP	37,900
	End bal	15,250
				wip	finished
	Job#			122	121
	Direct materials			3,700	6,700
	direct labor			2,300	4,500
	overhead			2070	4050
	total			8,070	15,250