Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
  

	April 30				May 31
Inventories
Raw materials	$	43,000			$	52,000
Work in process		10,200				21,300
Finished goods		63,000				35,600
Activities and information for May
Raw materials purchases (paid with cash)						210,000
Factory payroll (paid with cash)						345,000
Factory overhead
Indirect materials						15,000
Indirect labor						80,000
Other overhead costs						120,000
Sales (received in cash)						1,400,000
Predetermined overhead rate based on direct labor cost						70	%

1. Incurred other overhead costs (record credit to Other Accounts).
2. Application of overhead to work in process.

Prepare journal entries for the above transactions for the month of May.

Answer 1

Answer
	Journal Entries for May
	Particulars	Debit	Credit
1	Raw Material inventory a/c	9,000.00
	To Accounts Payable		9,000.00
	( To record increase in inventory Raw Material)
2	Work in Process	11,100.00
	To Raw Material		11,100.00
	( To record increase in inventory of work in process)
3	Cost of goods sold	27,400.00
	To Finished Goods		27,400.00
	( To record finished goods transferred to cost of goods sold)
4	Raw Material	2,10,000.00
	To Cash		2,10,000.00
	( To record purchase of raw material in cash)
5	factory payroll a/c	3,45,000.00
	To Cash		3,45,000.00
	( To record payment of factory payroll in cash)
6	Manufacturing overhead	15,000.00
	To raw materials		15,000.00
	( To record indirect material cost)
7	Manufacturing overhead	80,000.00
	To Factory wages payable)		80,000.00
	( To record indirect labour cost)
8	Manufactoring over head cost	1,20,000.00
	To Other overhead cost		1,20,000.00
	( To record Other over head cost)
9)	Cash A/c	14,00,000.00
	To Sales		14,00,000.00
	( Being sale made in cash)
	Predetermined overhead rate bade on diret labour cost i.e. 70%
	Overhead cost	345000*70%
	=	2,41,500.00
10)	Allocation of overhead cost to work in progress
	Total overhead cost          =	15000+80000+120000
		2,15,000.00
	Work in process a/c	1,50,500.00		(215000*70%)
	To Overhead cost		1,50,500.00