Question

The Searider Company uses a job-order costing system. The following transactions occurred in
April:
a. Raw materials were purchased on account, $180,000.
b. Raw materials used in production, $148,000 ($130,000 direct materials and $18,000 indirect
materials).
c. Accrued direct labor cost of $75,000 and indirect labor cost of $105,000.
d. Depreciation recorded on factory equipment, $40,000.
e. Other manufacturing overhead costs accrued during April, $118,000.
f. The company applies manufacturing overhead cost to production using a predetermined
overhead rate of $6 per machine-hours. A total of 46,000 machine-hours were used in April.
g. Jobs costing $495,000 according to their job cost sheets were completed during April and
transferred to Finished Goods.
h. Jobs that had cost $450,000 to complete according to their job cost sheets were shipped to
customers during the month. These jobs were sold on account at 30% above cost.
Required:
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 $39,000.

Answer 1

Journal entries
No	General journal				Debit	Credit
a.	Raw materials				180,000
	accounts payable					180,000
b.	Work in process inventory				130,000
	manufacturing overhead				18,000
	Raw materials					148,000
c.	Work in process inventory				75,000
	manufacturing overhead				105,000
	Wages payable					180,000
d.	Manufacturing overhead				40,000
	Accumulated depreciation					40,000
e.	Manufacturing overhead				118,000
	Accounts payable					118,000
f.	Work in process inventory				276000
	manufacturing overhead					276,000
	(46000*6)
g.	Finished goods				495,000
	Work in process inventory					495,000
h.	Cost of goods sold				450,000
	finished goods					450,000
	Accounts receivable				585000
	sales	(450,000*130%)				585,000
	Manufacturing overhead
b.	18,000	f.	276,000
c.	105,000
d.	40,000
e.	118,000
		End bal	-5,000
	Work In process inventory
Beg bal	39,000	g.	495,000
b.	130,000
c.	75,000
f.	276,000
end bal	25,000