Question

Kurtz Fencing Inc. uses a job order cost system. The following data summarize the operations related to production for March, the first month of operations: a. Materials purchased on account, $45,000. b. Materials requisitioned and factory labor used: Job Materials Factory Labor 301 $ 1,850 $2,500 302 3,150 7,220 303 2,200 5,350 304 1,800 2,400 305 4,230 6,225 306 1,770 2,900 For general factory use 1,200 5,000 c. Factory overhead costs incurred on account, $1,800. d. Depreciation of machinery and equipment, $2,500. e. The factory overhead rate is $30 per machine hour. Machine hours used: Job Machine Hours 301 30 302 60 303 41 304 63 305 70 306 36 Total 300 f. Jobs completed: 301, 302, 303, and 305. g. Jobs were shipped and customers were billed as follows: Job 301, $8,500; Job 302, $16,150; Job 303, $13,400. Required: 1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on March 31. Record item g as 2 entries. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. 2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month. For grading purposes enter transactions in alphabetical order. Determine the correct ending balance. The ending balance label is provided on the left side of the T account even when the ending balance is a credit. The unused cell on the balance line should be left blank. 3. Prepare a schedule of unfinished jobs to support the balance in the work in process account.* 4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.* *Refer to the list of Amount Descriptions provided for the exact wording of the answer choices for text entries.

Answer 1

The factory Overhead rate	30
Job	Mateials	Factory Labor	machine Hours	Total Overhead cost	Total Cost
301	$1,850.00	$2,500.00	30	$900.00	$5,250.00
302	$3,150.00	$7,220.00	60	$1,800.00	$12,170.00
303	$2,200.00	$5,350.00	41	$1,230.00	$8,780.00
304	$1,800.00	$2,400.00	63	$1,890.00	$6,090.00
305	$4,230.00	$6,225.00	70	$2,100.00	$12,555.00
306	$1,770.00	$2,900.00	36	$1,080.00	$5,750.00
Total	$15,000.00	$26,595.00		$9,000.00	$50,595.00
Finished jobs = Total cost of jobs 301, 302, 303 and 305
Finished jobs	$38,755.00
Work in Progress	$11,840.00
Cost of goods sold = Total cost of jobs 301,302 and 303
Cost of goods sold	$26,200.00
Sales = 8500 + 16150 + 13400 (values given in the problem)
Sales		$38,050.00

Journal Entries
	Particulars	Debit	Credit
a	Raw Material Inventory	45000
	Accounts Payable		45000
b	Work in progress	41595
	Factory Overhead (1200+5000)	6200
	Raw Material (15000+1200)		16200
	Factory Payroll (26595+5000)		31595
c	Factory Overhead	1800
	Accounts Payable		1800
d	Factory Overhead	2500
	Accumulated Depreciation		2500
e	Work in Progress	9000
	Factory Overhead		9000
f	Finished goods	38755
	Work in progress		38755
g	Accounts Receivable	38050
	Sales		38050
h	Cost of goods sold	26200
	Finished goods		26200

2)

T-Accounts
Work in Progress
b	41595	f	38755
e	9000
End Balance	(41595+9000-38755)		11840
Finished goods
f	38755	g	38050
End Balance	(38755-38050)		705

Note: The letters b, e, f and g in the above table represent the corresponding journal entries

3)	Schedule of Unfinished Jobs
	Jobs	Material	Factory labor	Overhead cost	Total Cost
	304	1800	2400	1890	6090
	306	1770	2900	1080	5750
	Total				11840
4)	Schedule of Completed jobs
	Jobs	Material	Factory labor	Overhead cost	Total Cost
	305	4230	6225	2100	12555