In: Accounting
Accounting for Materials and Labor Cliffs Custom Machine Shop had the following transactions during April:
a. Purchased raw materials on account for $98,000.
b. Requisitioned $80,000 of materials into production. Of this total, $70,000 was for direct materials.
c. Actual labor cost totaled $240,000. Assume labor has not yet been paid.
d. Direct labor incurred for the period totaled $190,000 and indirect labor totaled $50,000.
Requirement
1. Prepare summary journal entries for each transaction.
Journal entries
(a) Raw material Inventory A/c_Dr. $98000
To Cash A/c. Cr. $98000
(Being raw material purchased on account for cash)
(b)
1. Manufacturing overhead a/c_ Dr $10000
To indirect material a/c._ Cr $10000
(To record indirect material to production)
2. Work in Progress _A/c _ Dr. $80000
To Raw material inventory A/c _Cr. $70000
To manufacturing overhead a/c_Cr $10000
(Being raw material requisitioned for production)
(c) Work in progress A/c_. Dr.$240000
To salaries and wages payable A/c_Cr $ 240000
(Being labor cost changed to WIP a/c, but not paid)
(d)
1. Work in progress a/c_. Dr $190000
To Factory wages payable a/c Cr. $190000
(To record the direct labor incurred)
2. Manufacturing overhead a/c _ Dr $50000
To factory wages payable a/c_. Cr. $50000
(To record indirect labor to WIP inventories)
3. Work in Progress a/c _ Dr. $ 50000
To manufacturing overheads _cr $ 50000
(To record manufacturing overhead cost charged to WIP).