Question

Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $8,400 of indirect materials and $13,700 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Job 301		Job 302
Direct materials	$10,100	Direct materials	$19,000
Direct labor	8,500	Direct labor	16,200
Factory overhead	5,950	Factory overhead	11,340
Total	$24,550	Total	$46,540

Job 303		Job 304
Direct materials	$23,700	Direct materials	$12,700
Direct labor	16,300	Direct labor	11,800
Factory overhead	—	Factory overhead	—

Required:

Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles.

	a. Direct and indirect materials used.
	b. Direct and indirect labor used.
	c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).
	d. Completion of Jobs 301 and 302.
CHART OF ACCOUNTS
Old School Publishing Inc.
General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
132	Work in Process
133	Factory Overhead
134	Finished Goods
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
181	Land
191	Factory
192	Accumulated Depreciation-Factory

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Wages Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

Answer 1

Predetermined factory overhead rate = Estimated factory overhead / Estimated direct labor costs

Predetermined factory overhead rate = $5,950+11,340 / $8,500+16,200

Predetermined factory overhead rate = $17,290 / $24,700 *100 = 70% of direct labor costs

	General Journal	Debit	Credit
a	Work in process ($10,100+19,000+23,700+12,700)	$65,500
	Factory overhead	8,400
	Materials		$73,900
b	Work in process ($8,500+16,200+16,300+11,800)	$52,800
	Factory overhead	13,700
	Wages payable		$66,500
c	Work in process ($52,800*70%)	$36,960
	Factory overhead		$36,960
d	Finished goods ($24,550+46,540)	$71,090
	Work in process		$71,090