Question

J&B Guitars, Inc., a manufacturer of 6-string guitars, had the following activity during calendar year 2017: make some journal entries

1-Based on anticipated demand, the company planned for product sales to approximate $6,000,000 and Product Cost of approximately $2,500,000.

2-The company entered into a Line of Credit agreement with a bank totaling $5,000,000.

3-The company withdrew $4,000,000 from its line of credit and deposited the proceeds in its corporate checking accounting.

4-The company purchased $1,000,000 of raw materials on account.

5-The company requisitioned $500,000 of raw materials for production.

6-The company paid for Direct Labor totaling $750,000

7-The company applied Direct Overhead totaling $500,000

8-The company paid for Actual Overhead totaling $550,000

9-The company paid for the previously purchased $1,000,000 of raw materials (see 4. above).

10-The company paid for Selling and Administrative expenses totaling $1,400,000

11-The company calculated an underapplied overhead variance totaling $50,000 (see 6. and 7. above).

12-The company purchased a computer system for its just-in-time job process totaling $350,000 on account.

13-The company calculated depreciation expense related to the computer system totaling $70,000.

14-The company paid for Office Furniture for its accounting department totaling $100,000.

15-The company calculated depreciation expense related to the office furniture totaling $10,000.

16-The company completed products with total cost of 1,750,000.

17-The company sold $1,000,000 of product on account at a 300% markup.

Answer 1

J&B Guitars, Inc.
Journal entries
Transaction	General Journal	Debit	Credit
1	No entry
2	No entry
3	Cash	4,000,000
	Loan from Bank (or Line of Credit)		4,000,000
	(To record withdrew $4,000,000 from its line of credit and deposited the proceeds in its corporate checking accounting.)
4	Raw material inventory	1,000,000
	Account payable		1,000,000
	(To record Purchase of raw material inventory
5	Work in progress inventory	500,000
	Raw material inventory		500,000
	(To record Issue of raw material inventory into production process.)
6	Work in progress inventory	750,000
	Cash		750,000
	(To record paid for Direct Labor totaling.)
7	Work in progress inventory	500,000
	Manufacture overhead		500,000
	(To record applied Direct Overhead.)
8	Manufacture overhead	550,000
	Cash		550,000
	(To record Manufacture Overhead paid.)
9	Account payable	1,000,000
	Cash		1,000,000
	(To record payment made to account payable.)
10	Selling and Administrative expenses	1,400,000
	Cash		1,400,000
	(To record paid for Selling and Administrative expenses totaling $1,400,000
11	Cost of goods sold	50,000
	Manufacture overhead		50,000
	(To record under applied of manufacture overhead.)
12	Computer equipment	350,000
	Account payable		350,000
	(To record purchased a computer system for its just-in-time job process totaling $350,000 on account.)
13	Depreciation expense	70,000
	Accumulated depreciation - Computer equipment		70,000
	(To record depreciation expense related to the computer system)
14	Office Furniture	100,000
	Cash		100,000
	(To record paid for Office Furniture for its accounting department totaling $100,000)
15	Depreciation expense	10,000
	Accumulated depreciation - Office Furniture		10,000
	(To record depreciation expense related to the office furniture)
16	Finished goods inventory	1,750,000
	Work in progress inventory		1,750,000
	(To record completion of Finished goods inventory.)
17	Cost of goods sold	1,000,000
	Finished goods inventory		1,000,000
	(To record Finished goods Inventory sold.)
17	Account receivable (1000000 +(1000000*300%))	4,000,000
	Sales Revenue		4,000,000
	(To record sales revenue on account.)