Question

Required: Journalize the following transactions for Malone Custom Furniture Manufacturing (omit explanations):

a.   Incurred and paid advertising expenses, $3,500.

b. Incurred manufacturing wages of $30,000, 60% of which was direct labor and 40% of which was indirect labor. Wages will be paid at a later date.

c.   Purchased raw materials on account, $27,000.

d. Used in production: direct materials, $12,000; indirect materials, $5,500

e.   Recorded manufacturing overhead: depreciation on plant, $14,000; plant insurance (previously paid), $1,800; plant property tax, $4,500 (credit Property Tax Payable).

f.   Allocated manufacturing overhead to jobs, 150% of direct labor costs.

g. Completed production on jobs with costs of $55,000.

h. Sold inventory on account, $64,000; cost of goods sold, $35,000. The company uses the perpetual inventory system.

i.    Adjusted for overallocated or underallocated overhead.

Answer 1

No	Account Titles and Explanation	Debit	Credit
a	Advertising expense	$    3,500
	Cash		$    3,500
	(To record the advertising expense)
b	Work in process ($30,000*60%)	$ 18,000
	Manufacturing overhead ($30,000*40%)	$ 12,000
	Wages payable		$ 30,000
	(To record the wages)
c	Raw materials	$ 27,000
	Account payable		$ 27,000
	(To record the raw materials purchase on account)
d	Work in process	$ 12,000
	Manufacturing overhead	$    5,500
	Raw materials		$ 17,500
	(To record the materials used)
e	Manufacturing overhead	$ 20,300
	Accumulated depreciation-Plant		$ 14,000
	Prepaid plant insurance		$    1,800
	Property tax payable		$    4,500
	(To record the manufacturing overhead incurred)
f	Work in process ($18000*150%)	$ 27,000
	Manufacturing overhead		$ 27,000
	(To record the overhead applied)
g	Finished goods	$ 55,000
	Work in process		$ 55,000
	(To record the Jobs completed)
h	Account receivable	$ 64,000
	Sales revenue		$ 64,000
	(To record the sales)
	Cost of goods sold	$ 35,000
	Merchandise inventory		$ 35,000
	(To record the cost of goods sold)
i	Cost of goods sold	$ 10,800
	Manufacturing overhead		$ 10,800
	(To record the under-applied overhead)

Note:

Actual manufacturing overhead = $5,500 + $12,000 + $20,300 = $37,800

Overhead applied = $27,000

Under-applied overhead = $37,800 - $27,000 = $10,800