Question

Sager Company manufactures variations of its product, a technopress, in response to custom orders from its customers. On May 1, the company had no inventories of work in process or finished goods but held the following raw materials.

Material M	200	units		@		$	250		=		$	50,000
Material R	95	units		@			180		=			17,100
Paint	55	units		@			75		=			4,125
Total cost											$	71,225

On May 4, the company began working on two technopresses: Job 102 for Worldwide Company and Job 103 for Reuben Company.

1. Purchased raw materials on credit and recorded the following information from receiving reports and invoices.

Receiving Report No. 426, Material M, 250 units at $250 each.
Receiving Report No. 427, Material R, 90 units at $180 each.

Record these purchases with a single journal entry. Enter the receiving report information on the materials ledger cards.

2. Requisitioned the following raw materials for production.

Requisition No. 35, for Job 102, 135 units of Material M.
Requisition No. 36, for Job 102, 72 units of Material R.
Requisition No. 37, for Job 103, 70 units of Material M.
Requisition No. 38, for Job 103, 38 units of Material R.
Requisition No. 39, for 15 units of paint.

Enter amounts for direct materials requisitions on the materials ledger cards and the job cost sheets. Enter the indirect materials amount on the materials ledger card.

3. Received the following employee time tickets for work in May.

Time tickets Nos. 1 to 10 for direct labor on Job 102, $90,000.
Time tickets Nos. 11 to 30 for direct labor on Job 103, $65,000.
Time tickets Nos. 31 to 36 for equipment repairs, $19,250.

Record direct labor from the time tickets on the job cost sheets.

4. Paid cash for the following items during the month: factory payroll, $174,250, and miscellaneous overhead items, $102,000. Use the time tickets to record the total direct and indirect labor costs.
5. Finished Job 102 and transferred it to the warehouse. The company assigns overhead to each job with a predetermined overhead rate equal to 80% of direct labor cost.

Enter the allocated overhead on the cost sheet for Job 102, fill in the cost summary section of the cost sheets.

6. Delivered Job 102 and accepted the customer’s promise to pay $400,000 within 30 days.
7. Applied overhead cost to Job 103 based on the job’s direct labor to date.

Required:
Complete the materials ledger cards for Material M, Material R, and paint using the information given in part a and b. Complete the job cost sheets for Jobs 102 and 103 using the information given in part a, b, c and e. Prepare journal entries for part a through g.

MATERIALS LEDGER CARD Item Material M Received Issued Balance Date Receiving Report Units Unit Price Total Price Requisition Units Unit Price Total Price Units Unit Price Total Price May 1 Item Material R Received Issued Balance Date Receiving Report Units Unit Price Total Price Requisition Units Unit Price Total Price Units Unit Price Total Price May 1 Item Paint Received Issued Balance Date Receiving Report Units Unit Price Total Price Requisition Units Unit Price Total Price Units Unit Price Total Price May 1

Complete the job cost sheets for Jobs 102 and 103 using the information given in part a, b, c and e.

JOB COST SHEET Customer's Name Worldwide Company Job No. 102 Direct Materials Direct Labor Overhead Costs Applied Requisition Number Amount Time Ticket Number Amount Rate % Amount Total 0 Total 0 Total 0 Summary of Costs Total cost of Job 0 Customer's Name Reuben Company Job No. 103 Direct Materials Direct Labor Overhead Costs Applied Requisition Number Amount Time Ticket Number Amount Rate % Amount Total 0 Total 0 Total 0 Summary of Costs Total cost of Job 0

Answer 1

MATERIALS LEDGER CARD
Item	Material M
Received					Issued				Balance
Date	Receiving Report	Units	Unit Price	Total Price	Requisition	Units	Unit Price	Total Price	Units	Unit Price	Total Price
May-01									200	$        250	$        50,000
	426	250	$        250	$        62,500					450	$        250	$     112,500
					35	135	$        250	$ 33,750	315	$        250	$        78,750
					37	70	$        250	$ 17,500	245	$        250	$        61,250
Item	Material R
Received					Issued				Balance
Date	Receiving Report	Units	Unit Price	Total Price	Requisition	Units	Unit Price	Total Price	Units	Unit Price	Total Price
May-01									95	$        180	$        17,100
	427	90	$        180	$        16,200					185	$        180	$        33,300
					36	72	$        180	$ 12,960	113	$        180	$        20,340
					38	38	$        180	$    6,840	75	$        180	$        13,500
Item	Paint
Received					Issued				Balance
Date	Receiving Report	Units	Unit Price	Total Price	Requisition	Units	Unit Price	Total Price	Units	Unit Price	Total Price
May-01									55	$           75	$          4,125
					39	15	$          75	$    1,125	40	$           75	$          3,000

JOB COST SHEET
Customer's Name	Worldwide Company			Job No.	102
Direct Materials		Direct Labor		Overhead Costs Applied
Requisition Number	Amount	Time Ticket Number	Amount	Rate %	Amount
35	$      33,750	1 To 10	$ 90,000	80%	$ 72,000
36	$      12,960
Total	$      46,710	Total	$ 90,000	Total	$ 72,000
Summary of Costs
Direct Materials	$      46,710
Direct Labor	$      90,000
Overhead Costs Applied	$      72,000
Total cost of Job	$    208,710
Customer's Name	Reuben Company			Job No.	103
Direct Materials		Direct Labor		Overhead Costs Applied
Requisition Number	Amount	Time Ticket Number	Amount	Rate %	Amount
37	$      17,500	11 To 30	$ 65,000	80%	$ 52,000
38	$         6,840
Total	$      24,340	Total	$ 65,000	Total	$ 52,000
Summary of Costs
Direct Materials	$      24,340
Direct Labor	$      65,000
Overhead Costs Applied	$      52,000
Total cost of Job	$ 141,340

Journal entries
Event	General Journal	Debit	Credit
A	Raw material inventory	78,700
	Account payable		78,700
	(To record Purchase of raw material inventory.) (62500+16200)
B 1	Work in progress inventory	71,050
	Raw material inventory		71,050
	(To record Issue of raw material inventory into production process.) (33750+17500+12960+6840)
B 2	Manufacture overhead	1,125
	Raw material inventory		1,125
	(To record Issue of indirect raw material inventory for Manufacturing.) (Hint: Paint is indirect Material.)
C 1	Work in progress inventory	155,000
	Wages Payable		155,000
	(To record direct labor Consumed.) (90000+65000)
C 2	Manufacture overhead	19,250
	Wages Payable		19,250
	(To record indirect labor Consumed.) (Hint:Time tickets Nos. 31 to 36)
D	Wages Payable	174,250
	Manufacture overhead	102,000
	Cash		276,250
	(To Factory payroll and Manufacture overhead paid.)
E	Work in progress inventory	124,000
	Manufacture overhead		124,000
	(To record Manufacture overhead Applied to Job.) (72000+52000)
F	Finished goods inventory	208,710
	Work in progress inventory		208,710
	(To record completion of Finished goods inventory.) (Job 102)
G 1	Cost of goods sold	208,710
	Finished goods inventory		208,710
	(To record Finished goods Inventory sold.)
G 2	Account receivable	400,000
	Sales Revenue		400,000
	(To record sales revenue on account.)