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, $220,000. Materials requisitions record use of the following materials for the month. Job 136 $49,000 Job 137 32,500 Job 138 20,000 Job 139 22,600 Job 140 6,600 Total direct materials 130,700 Indirect materials 20,500 Total materials used $151,200 Paid $15,250 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 $12,300 Job 137 10,700 Job 138 37,900 Job 139 39,400 Job 140 3,200 Total direct labor 103,500 Indirect labor 24,000 Total $127,500 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 $545,000. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building $69,500 Depreciation of factory equipment 38,000 Expired factory insurance 10,000 Accrued property taxes payable 36,500 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. rev: 02_01_2017_QC_CS-77139 Problem 19-3A Part 2 2. Prepare journal entries to record the events and transactions a through i.

Answer 1

Widmer Watercraft’s
Individual Job sheet
Job	Job 136	Job 137	Job 138	Job 139	Job 140	Total
Direct material	$ 49,000	$ 32,500	$    20,000	$     22,600	$    6,600	$ 130,700
Direct labor	$ 12,300	$ 10,700	$    37,900	$     39,400	$    3,200	$ 103,500
Applied overhead (Direct labor *200%)	$ 24,600	$ 21,400	$    75,800	$     78,800	$    6,400	$ 207,000
total cost added during period	$ 85,900	$ 64,600	$ 133,700	$ 140,800	$ 16,200	$ 441,200
Status	Finished Goods (Sold)	In Progress	Finished Goods (Sold)	Finished Goods (Unsold)	In Progress
Cost included in	Cost of Goods Sold	Work in Progress Inventory	Cost of Goods Sold	Finished Goods Inventory	Work in Progress Inventory

Widmer Watercraft’s
Journal entries
Event	Account title	Debit	Credit
A	Raw material inventory	220,000
	Account payable		220,000
	(To record Purchase of raw material inventory
B 1	Work in progress inventory	130,700
	Raw material inventory		130,700
	(To record Issue of raw material inventory into production process.)
B 2	Manufacture overhead	20,500
	Raw material inventory		20,500
	(To record Issue of indirect raw material inventory for Manufacturing.)
C	Manufacture overhead	15,250
	Cash		15,250
	(To Paid $15,250 cash to a computer consultant to reprogram factory equipment.)
D 1	Work in progress inventory	103,500
	cash		103,500
	(To record direct labor Consumed.)
D 2	Manufacture overhead	24,000
	cash		24,000
	(To record indirect labor Consumed.)
E	Work in progress inventory	179,200
	Manufacture overhead		179,200
	(To record Applied overhead to Jobs 136, 138, and 139.) (24600+75800+78800)
F	Finished goods inventory	360,400
	Work in progress inventory		360,400
	(To record completion of Jobs 136, 138, and 139 to Finished Goods.) (85900+133700+140800)
G 1	Account Receivable	545,000
	Sales Revenue		545,000
	(To record sales revenue.)
G 2	Cost of goods sold	219,600
	Finished goods inventory		219,600
	(To record Finished goods Inventory sold.) (85900+133700)
H	Manufacture overhead	154,000
	Accumulated depreciation - equipment		38,000
	Accumulated depreciation - building		69,500
	Prepaid Insurance		10,000
	Accrued property taxes payable		36,500
	(To record Manufacture overhead incurred.)
I	Work in progress inventory	31,000
	Manufacture overhead		31,000
	(To record Applied overhead at month-end to the Work in Process Inventory account) (Jobs 137 and 140) (24600+6400)