Question

In: Accounting

Accounting for Materials and Labor Cliffs Custom Machine Shop had the following transactions during April: a....

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.

Solutions

Expert Solution

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)

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).

ekkarill92 answered 1 year ago

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