Question

11. Tybee Industries Inc. uses a job order cost system. The following data summarize the operations related to production for January, the first month of operations:

	a. Materials purchased on account, $29,050.
	b. Materials requisitioned and factory labor used:

Job	Materials	Factory Labor
301	$2,870	$2,870
302	3,690	3,770
303	2,300	1,920
304	8,510	7,050
305	5,000	5,250
306	3,770	3,240
For general factory use	1,030	4,110

	c. Factory overhead costs incurred on account, $5,400.
	d. Depreciation of machinery and equipment, $2,000.
	e. The factory overhead rate is $52 per machine hour. Machine hours used:

Job	Machine Hours
301	27
302	35
303	29
304	70
305	39
306	25
Total	225 f. Jobs completed: 301, 302, 303 and 305. g. Jobs were shipped and customers were billed as follows: Job 301, $8,310; Job 302, $11,120; Job 303, $14,320. Required: 1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on January 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles.

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
132	Work in Process
133	Factory Overhead
134	Finished Goods
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
181	Land
191	Machinery and Equipment
192	Accumulated Depreciation-Machinery and Equipment

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Wages Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
531	Selling Expenses
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
540	Administrative Expenses
561	Depreciation Expense-Machinery and Equipment
590	Miscellaneous Expense
710	Interest Expense

1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on January 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

1) The required journal entries for the given transactions are shown as follows:-

Journal Entries (Amounts in $)

No	Date	Account Titles and Explanations	Debit	Credit
a)	Jan 31	Materials	29,050
		Accounts Payable		29,050
		(To record the purchase of materials on account)
b)	Jan 31	Work in Process (Direct materials and direct labor) (Job 301 to Job 306)	50,240
		Factory Overhead (For general factory use) (1,030+4,110)	5,140
		Materials (total materials issued)		27,170
		Wages Payable (total labor issued)		28,210
		(To record the issue of materials and labor)
c)	Jan 31	Factory Overhead	5,400
		Accounts Payable		5,400
		(To record the factory overhead cost incurred on account)
d)	Jan 31	Factory Overhead	2,000
		Accumulated Depreciation-Machinery and Equipment		2,000
		(To record the depreciation expense)
e)	Jan 31	Work in Process (225 hrs*$52)	11,700
		Factory Overhead		11,700
		(To record the applied factory overhead)
f)	Jan 31	Finished Goods (Only Cost related to Job 301, 302, 303 and 305)	34,430
		Work in Process [27,670+(130*$52)]		34,430
		(To record the cost of jobs completed)
g)	Jan 31	Accounts Receivable (8,310+11,120+14,320)	33,750
		Sales		33,750
		(To record the sales revenue)
	Jan 31	Cost of goods sold [17,420+(91 hrs*$52)]	22,152
		Finished Goods		22,152
		(To record the cost of jobs 301,302 and 303)