Question

Raw materials purchased on account, $210,000.

Raw materials used in production, $191,000 ($152,800 direct materials and $38,200 indirect materials).

Accrued direct labor cost of $50,000 and indirect labor cost of $21,000.

Depreciation recorded on factory equipment, $104,000.

Other manufacturing overhead costs accrued during October, $130,000.

The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,300 machine-hours were used in October.

Jobs costing $513,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

Jobs that had cost $451,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 24% above cost.

Required:

1. Prepare journal entries to record the transactions given above.

2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.

Answer 1

Requirement 1 :
Journal entries to record the above transactions :
No.	Transaction	general Journal	Debit	Credit
1	a	Raw mateirals	210000
		To accounts payable		210000
		(Being raw materials purchased on account )
2	b	Work in process	152800
		manfacturing overhead	38200
		To raw material		191000
		(Being materials and labour used in production
3	C	Work in process	50000
		manfacturing overhead	21000
		To salaries payable		71000
		(Being accrued direct labour cost and indirect labour cost recorded)
4	d	manfacturing overhead	104000
		TO accumulated depreciation		104000
		(Being depreciation recorded)
5	e	Manfacturing overhead	130000
		To accounts payable		130000
		(Being other manfacturing overhead recorded)
6	f	Work in process	534100
		TO manfacturing overhead		534100
		(Being using a pre determined overhead rate overhead was charged)
7	g	Finished goods	513000
		To work in process		513000
		(Being transfer to finnished goods)
8	h	Cost of goods sold	451000
		To finished goods		451000
		(Being shipped to customers during month)
9	h	Accounts receivables	559240
		To sales		559240
		(Being sales made at 30% above cost)
Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36000
		Manfacturing overhead							Work in process
	b	38200	534100	f			Beginning balance		36000
	c	21000					b		152800	513000	g
	d	104000					c		50000
	e	130000					f		534100
	Ending balance	240900					Ending balance			259900