Question

Exercise 15-5 Manufacturing cost flows LO P1, P2, P3

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,600, direct labor of $3,000, and applied overhead of $2,700. Custom Cabinetry applies overhead at the rate of 90% of direct labor cost. During July, Job 120 is sold (on account) for $30,500, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July.

July Product Costs	Job 120			Job 121			Job 122			Total
Direct materials	$	1,500		$	6,700		$	3,400		$	11,600
Direct labor		2,800			3,800			2,900			9,500
Overhead applied		?			?			?			?

1. Prepare journal entries for the following in July.

1. Direct materials used in production.
2. Direct labor used in production.
3. Overhead applied.
4. The sale of Job 120.
5. Cost of goods sold for Job 120.

2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Prepare journal entries for the above transactions in July.

No	Transaction	General Journal	Debit	Credit
1	a.	No Transaction Recorded
2	b.	No Transaction Recorded
3	c.	No Transaction Recorded
4	d.	No Transaction Recorded
5	e.	No Transaction Recorded

• Required 2

Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

	Work in Process Finished Goods Job # Direct materials Direct labor Overhead Total cost $0 $0

Answer 1

		Job 120	Job 121	Job 122	Total
	Direct material	1500	6700	3400	11600
	Direct labor	2800	3800	2900	9500
	Overhead applied	2520	3420	2610	8550
	Total	6820	13920	8910	29650
	Beginning	13300
	Total	20120
a	Work in progress	11600
	Raw material inventory		11600
b	Work in progress	9500
	Wages payable		9500
c	Work in progress	8550
	Factory overheads		8550
d	Accounts receivable	30500
	Sales revenue		30500
e	Cost of goods sold	20120
	Finished goods inventory
		Finished goods	Work in progress
	Direct material	6700	3400
	Direct labor	3800	2900
	Overhead applied	3420	2610
	Total	13920	8910