Question

Bergamo Bay's computer system generated the following trial balance on December 31, 2017. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Payroll Payable) has not been recorded.

		Debit			Credit
Cash	$	61,000
Accounts receivable		40,000
Raw materials inventory		25,000
Work in process inventory		0
Finished goods inventory		12,000
Prepaid rent		4,000
Accounts payable				$	11,200
Notes payable					14,200
Common stock					40,000
Retained earnings					94,000
Sales					173,600
Cost of goods sold		120,000
Factory overhead		27,000
Operating expenses		44,000
Totals	$	333,000		$	333,000

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Materials requisition 21-3010:		$	4,600	direct materials to Job 402
Materials requisition 21-3011:		$	7,900	direct materials to Job 404
Materials requisition 21-3012:		$	2,400	indirect materials
Labor time ticket 6052:		$	3,000	direct labor to Job 402
Labor time ticket 6053:		$	8,000	direct labor to Job 404
Labor time ticket 6054:		$	4,000	indirect labor

Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 150% of direct labor cost.

Direct materials costs to Work in Process Inventory.

Direct labor costs to Work in Process Inventory.

Overhead costs to Work in Process Inventory.

Indirect materials costs to the Factory Overhead account.

Indirect labor costs to the Factory Overhead account.

Required:
1. Prepare journal entries to assign the above costs.

Answer 1

Transaction	General Journal		Debit ($)	Credit ($)
	Goods in process inventory (4,600+7,900)		12,500
		Raw materials inventory		12,500
	Goods in process inventory (3,000+8,000)		11,000
		Factory payroll		11,000
Note 1	Goods in process inventory		33,400
		Factory overhead		33,400
	Factory overhead		2,400
		Raw materials inventory		2,400
	Factory overhead		4,000
		Factory payroll		4,000
Note 1	Factory overhead = (27,000+2,400+4,000) = 33,400