Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October:

a.Raw materials purchased on account, $209,000.

b.Raw materials used in production, $192,000 ($153,000 direct materials and $38,400 indirect materials).

c.Accrued direct labor cost of $49,000 and indirect labor cost of $20,000

d.Depreciation recorded on factory equipment, $105,000.

e.Other manufacturing overhead costs accrued during October, $130,000.

f.The company applies manufacturing overhead cost to production using a predetermined rate of $9 per machine-hour. A total of 76,400 machine-hours were used in October.

g.Jobs costing $513,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

h.Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 32% above cost.

Required SHOW ALL WORK:

1.Prepare journal entries to record the transactions given above.

2.Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.

Answer 1

1)

		Debit	Credit
a	Raw Materials	209,000.00
	Accounts Payable		209,000.00
b	Work in Process	153,000.00
	Manufacturing Overhead	39,000.00
	Raw Materials		192,000.00
c	Work in Process	49,000.00
	Manufacturing Overhead	20,000.00
	Salaries and Wages Payable		69,000.00
d	Manufacturing Overhead	105,000.00
	Accumulated Depreciation		105,000.00
e	Manufacturing Overhead	130,000.00
	Accounts Payable		130,000.00
f	Work in Process	687,600.00
	Manufacturing Overhead		687,600.00
g	Finished Goods	513,000.00
	Work in Process		513,000.00
h	Cost of Goods Sold	449,000.00
	Finished Goods		449,000.00
	Accounts Receivable	592,680.00
	Sales		592,680.00

2)

Manufacturing Overhead
b	39,000.00	f	687,600.00
c	20,000.00
d	105,000.00
e	130,000.00
			393,600
			Overapplied overhead

Work in Process
Bal	36,000.00	g	513,000.00
b	153,000.00
c	49,000.00
f	687,600.00
Bal	412,600.00