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Philippine-based question The Anda Company had the following inventories on August 1 of the current year....
Philippine-based question
The Anda Company had the following inventories on August 1 of the current year.
| Finished goods | Php 25000 |
| Work in process | Php 18500 |
| Materials | Php 22000 |
The work in process account controls two jobs
| Job 401 | Job 402 | |
| Materials | Php 3000 | Php 5600 |
| Labor | Php 2500 | Php 3000 |
| Factory overhead | Php 2000 | Php 2400 |
| Php 7500 | Php 11000 |
The following information pertains to December operations:
- Materials Purchased on account, P28,000
- Materials issued for production, P25,000. Of this amount, P3,000 was for indirect materials; the difference was distributed; P5,500 to Job 401; P7,000 to 402; and P9,500 to 403.
- Materials returned to the warehouse from the factory, P800, of which P300 was for indirect materials, the balance from Job 403.
- Materials returned to vendors P1,000
- Payroll after deducting P3,025 for withholding taxes, P1,600 for SSS Premiums, P375 for Medicare and P1,200 for Pag-ibig, was P32,800. The payroll due the employees was paid during the month.
- The payroll was distributed as follows: P10,400 to Job 401; P12,500 to Job 402, P10,500 to Job 403 and the balance represents indirect labor.
- The share of the employer payroll was recorded – P2,000 for SSS Premiums, P375 for Medicare and P1,200 for Pag-ibig
- Factory overhead, other than previously mentioned, amounted to P15,000. Included in this figure were P3,000 for depreciation of factory building and equipment, and P950 for expired insurance on the factory. The remaining overhead was unpaid at the end of August.
- Factory overhead was applied to production at the rate of 80% of direct labor cost
- Jobs 401 & 402 were completed & transferred to the finished goods warehouse.
- Job 401 was shipped and billed at a gross of 40% of the cost
- Cash collections from Accounts Receivable during August were P70,000
Requirements:
Prepare Journal Entries to record the above transactions.
Solutions
Expert Solution
| WIP Inventory Details | All Amount Php | |||
| Job No | Job 401 | Job 402 | Job 403 | Total |
| Opening balance | ||||
| Materials | 3,000.00 | 5,600.00 | 8,600.00 | |
| Labor | 2,500.00 | 3,000.00 | 5,500.00 | |
| Factory Overhead | 2,000.00 | 2,400.00 | 4,400.00 | |
| Total Opening Balance | 7,500.00 | 11,000.00 | - | 18,500.00 |
| Cost Added During Month | ||||
| Direct Materials | 5,500.00 | 7,000.00 | 9,500.00 | 22,000.00 |
| Direct Labor | 10,400.00 | 12,500.00 | 10,500.00 | 33,400.00 |
| Factory Overhead applied @80% of Direct Labor | 8,320.00 | 10,000.00 | 8,400.00 | 26,720.00 |
| Total Cost added during Month | 24,220.00 | 29,500.00 | 28,400.00 | 82,120.00 |
| Total Job Cost with Opening Balance cost | 31,720.00 | 40,500.00 | 28,400.00 | 100,620.00 |
| Job status at month end | shipped | FG | WIP |
| Journal Entries to record transactions: | |||
| Sr No | Account Title | Dr Php | Cr Php |
| 1 | Materials Inventory | 28,000.00 | |
| Accounts Payable | 28,000.00 | ||
| (purchase of materials on a/c) | |||
| 2 | Manufacturing Overhead Account | 3,000.00 | |
| WIP Job # 401 | 5,500.00 | ||
| WIP Job # 402 | 7,000.00 | ||
| WIP Job # 403 | 9,500.00 | ||
| Materials Inventory | 25,000.00 | ||
| ( Issue of Direct and Indirect Materials to MFg OH & WIP a/cs) | |||
| 3 | Manufacturing Overhead Account | 9,175.00 | |
| WIP Job # 401 | 10,400.00 | ||
| WIP Job # 402 | 12,500.00 | ||
| WIP Job # 403 | 10,500.00 | ||
| Withholding Taxes Payable | 3,025 | ||
| SSS Premium Payable -Employee | 1,600 | ||
| Medicare Payable -Employee | 375 | ||
| Pag-ibig Payable -Employee | 1,200 | ||
| SSS Premium Payable -Employer | 2,000 | ||
| Medicare Payable -Employer | 375 | ||
| Pag-ibig Payable -Employer | 1,200 | ||
| Wages Payable | 32,800 | ||
| ( Payroll expenses recorded for WIP and Mfg OH with liability a/cs ) | |||
| 4 | Manufacturing Overhead Account | 3,000 | |
| Accumulated Depreciation -Factory Building &Equipment | 3,000 | ||
| Manufacturing Overhead Account | 950 | ||
| Prepaid Insurance | 950 | ||
| Manufacturing Overhead Account | 11,050 | ||
| Accounts Payable | 11,050 | ||
| ( Other Factory Overheads recorded) | |||
| 5 | WIP Job # 401 | 8,320 | |
| WIP Job # 402 | 10,000 | ||
| WIP Job # 403 | 8,400 | ||
| Manufacturing Overhead Account | 26,720 | ||
| ( Mfg OH appled to Jobs @80% of Direct Labor cost) | |||
| 6 | Finished Goods Inventory | 72,220 | |
| WIP Job # 401 | 31,720 | ||
| WIP Job # 402 | 40,500 | ||
| ( Job 401 & 402 transferred to FG inventory) | |||
| 7 | Sales | 44,408 | |
| Accounts Receivable | 44,408 | ||
| Cost of Goods Sold | 31,720 | ||
| Finished Goods Inventory | 31,720 | ||
| ( Sale of Job 401 with 40% mark up) | |||
| 8 | Cash |
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