Question

Widmer Watercraft’s predetermined overhead rate is 200% of direct labor. Information on the company’s production activities during May 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 33,000 Job 138 19,200 Job 139 23,000 Job 140 7,200 Total direct materials 131,400 Indirect materials 21,000 Total materials used $ 152,400 Paid $15,500 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 $ 12,100 Job 137 10,700 Job 138 37,700 Job 139 39,200 Job 140 3,200 Total direct labor 102,900 Indirect labor 25,000 Total $ 127,900 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 $540,000. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building $ 68,500 Depreciation of factory equipment 37,000 Expired factory insurance 11,000 Accrued property taxes payable 35,000 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. Can someone help me with the T accounts and the last exercise ?? Thank you

Answer 1

Answer-Prepare job cost sheet for each job worked on during the month:-

	Job No.136	Job No.137	Job No.138	Job No.139	Job No.140
Materials	49,000	33,000	19,200	23,000	7,200
Labor	12,100	10,700	37,700	39,200	3,200
Overhead (200% of labor)	24,200	21,400	75,400	78,400	6,400
Total Cost	85,300	65,100	132,300	140,600	16,800

2. journal entries to record the events and transactions a through i -

Transaction	General Journal	Debit	Credit
a.	Raw materials inventory	220,000
	Accounts payable		220,000
b.	Factory payroll	127,900
	Cash		127,900
c.	Factory overhead	15,500
	Cash		15,500
d.	Goods in process inventory	131,400
	Factory overhead	21,000
	Raw materials inventory		152,400
e.	Goods in process inventory	102,900
	Factory overhead	25,000
	Factory payroll		127,900
f. (hint↓)	Goods in process inventory	178,000
	Factory overhead		178,000
g. (hint↓)	Finished goods inventory	358,200
	Goods in process inventory		358,200
h(1).	Accounts receivable	540,000
	Sales		540,000
h(2). (hint↓)	Cost of goods sold	217,600
	Finished goods inventory		217,600
i.	Factory overhead	151,500
	Accum. depreciation—Factory building		68,500
	Accum. depreciation—Factory equipment		37,000
	Prepaid insurance		11,000
	Property taxes payable		35,000
j. (hint↓)	Goods in process inventory	27,800
	Factory overhead		27,800

f.	To apply overhead to jobs: [($12,100 + $37,700 + $39,200) × 200%] = $178,000
g.	To record completion of jobs: ($85,300 + $132,300 + $140,600) = $358,200
h.	To record cost of sales: ($85,300 + $132,300) = $217,600
j.	To apply overhead to jobs: [($10,700 + $3,200) × 200%] = $27,800

3. journal entries for the transactions to the following T-accounts, each of which started the month with a zero balance-

Raw Material Inventory
a.	220,000	152,400	d
End Bal.	67,600
Factory Payroll
b	127,900	127,900	e
End Bal.	-
Good in Process inventory
d	131,400
e	102,900
f	178,000	358,200	g
j	27,800
End Bal.	81,900
Factory Overhead
c	15,500
d	21,000	178,000	f
e	25,000	27,800	j
i	151,500
End Bal.	7,200
Finished Goods Inventory
g	358,200	217,600	h
End Bal.	140,600
Cost of Goods Sold
h	217,600
End Bal.	217,600

4-Reports of total cost of each job as shown below:-

Work in Process

Job 137	65,100
Job 140	16,800
Total Work in Process	$81,900

Finished Goods

Job 139

$140,600

Cost of Goods Sold:-

Job 136	85,200
Job 138	132,300
Total Cost of Goods Sold	$217,500

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