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In: Accounting

Marcelino Co.'s March 31 inventory of raw materials is $90,000. Raw materials purchases in April are...

Marcelino Co.'s March 31 inventory of raw materials is $90,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $385,000. Overhead costs incurred in April are: indirect materials, $52,000; indirect labor, $26,000; factory rent, $38,000; factory utilities, $24,000; and factory equipment depreciation, $56,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $660,000 cash in April. Costs of the three jobs worked on in April follow.

Job 306 Job 307 Job 308
Balances on March 31
Direct materials $ 30,000 $ 39,000
Direct labor 24,000 16,000
Applied overhead 12,000 8,000
Costs during April
Direct materials 131,000 200,000 $ 100,000
Direct labor 104,000 154,000 101,000
Applied overhead ? ? ?
Status on April 30 Finished (sold) Finished (unsold) In process
  1. Materials purchases (on credit).
  2. Direct materials used in production.
  3. Direct labor paid and assigned to Work in Process Inventory.
  4. Indirect labor paid and assigned to Factory Overhead.
  5. Overhead costs applied to Work in Process Inventory.
  6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
  7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
  8. Cost of goods sold for Job 306.
  9. Revenue from the sale of Job 306.
  10. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)


2. Prepare journal entries for the month of April to record the above transactions.

Solutions

Expert Solution

S.no General Journal Debit Credit
1 a Raw Materials Inventory 500000
Accounts payable 500000
2 b Work in Process Inventory 431000
Raw Materials Inventory 431000
(131000+200000+100000)
3 c Work in Process Inventory 359000
Cash 359000
104000+154000+101000
4 d Factory overhead 26000
Cash 26000
5 e Work in Process Inventory 179500
Factory overhead 179500
359000*50%
6 f(1) Factory overhead 52000
Raw Materials Inventory 52000
7 f(2) Factory overhead 24000
Cash 24000
8 f(3) Factory overhead 56000
Accumulated Depreciation- factory equipment 56000
9 f(4) Factory overhead 38000
Cash 38000
10 g Finished goods inventory 847000
Work in progress inventory 847000
(30000+24000+12000+131000+104000+52000)+
(39000+16000+8000+200000+154000+77000)
11 h Cost of goods sold 353000
Finished goods inventory 353000
12 i Cash 660000
Sales 660000
13 j Cost of goods sold 16500
Factory Over head 16500
(179500-52000-26000-38000-24000-56000)

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