Question

Marcelino Co.'s March 31 inventory of raw materials is $89,000. Raw materials purchases in April are $560,000, and factory payroll cost in April is $376,000. Overhead costs incurred in April are: indirect materials, $51,000; indirect labor, $21,000; factory rent, $39,000; factory utilities, $19,000; and factory equipment depreciation, $57,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $690,000 cash in April. Costs of the three jobs worked on in April follow.

	Job 306	Job 307	Job 308
Balances on March 31
Direct materials	$26,000	$37,000
Direct labor	24,000	18,000
Applied overhead	12,000	9,000
Costs during April
Direct materials	131,000	205,000	$110,000
Direct labor	102,000	152,000	101,000
Applied overhead	?	?	?
Status on April 30	Finished (sold)	Finished (unsold)	In process

1. Materials purchases (on credit).
2. Direct materials used in production.
3. Direct labor paid and assigned to Work in Process Inventory.
4. Indirect labor paid and assigned to Factory Overhead.
5. Overhead costs applied to Work in Process Inventory.
6. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
7. Transfer of Jobs 306 and 307 to Finished Goods Inventory.
8. Cost of goods sold for Job 306.
9. Revenue from the sale of Job 306.
10. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Answer 1

2
	General Journal	Debit	Credit
1	Raw materials inventory	560000
	Accounts Payable		560000
2	Work in Process inventory	446000
	Raw materials inventory		446000
3	Work in Process inventory	355000
	Cash		355000
4	Factory overhead	21000
	Cash		21000
5	Work in Process inventory	177500
	Factory overhead		177500
6	Factory overhead	51000
	Raw materials inventory		51000
7	Factory overhead	19000
	Cash		19000
8	Factory overhead	57000
	Accumulated depreciation -factory equipment		57000
9	Factory overhead	39000
	Cash		39000
10	Finished goods inventory	843000
	Work in Process inventory		843000
11	Cost of goods sold	346000
	Finished goods inventory		346000
12	Cash	690000
	Sales		690000
13	Cost of goods sold	9500
	Factory overhead		9500
Workings:
From March
Direct Materials	26000	37000		63000
Direct Labor	24000	18000		42000
Applied overhead	12000	9000		21000
Beginning goods in process	62000	64000	0	126000
For April
Direct Materials	131000	205000	110000	446000
Direct Labor	102000	152000	101000	355000
Applied overhead	51000	76000	50500	177500
Total costs added in April	284000	433000	261500	978500
Total costs (April 30)	346000	497000	261500	1104500
Status on April 30	Finished (sold)	Finished (unsold)	In process
April 30 cost included in:	Cost of goods sold	Finished goods inventory	Goods in process inventory
	Actual factory overhead:
	Indirect materials	51000
	Indirect labor	21000
	Factory rent	39000
	Factory utilities	19000
	Factory depreciation equipment	57000
	Actual factory overhead	187000
	Applied overhead	177500
	Underapplied overhead	9500