Question

At the beginning of 2020, Dexter Company estimated that it would incur $220,000 of manufacturing overhead cost during 2020 and use 20,000 direct labor hours. On January 1, 2020, beginning balances of Materials Inventory, Work in Process Inventory, and Finished Goods Inventory were $60,000, $-0-, and $115,000, respectively.

Required:

Using the following account letters, indicate the journal entries to record the following for 2020. For example, the payment of an account payable would be: A, C. List the debit letter(s) first. Also indicate the entry amounts for 2, 3, 5, 6 and 7.

1. Purchased materials on account, $425,000.

2. Of the $425,000 total dollar value of materials used, $395,000 represented direct material.

3. Determined total factory labor, $228,000 (19,000 hrs. @$12/hr.). Of the factory labor, 16,500 were direct labor hours.

4. Incurred actual manufacturing overhead other than those items already recorded, $110,000. (Credit Accounts Payable and Accumulated Depreciation)

5. Applied manufacturing overhead based on direct labor hours to production.

6. Ending inventory of work in process was $75,000. Record the cost of goods manufactured.

7. Transferred the balance in Manufacturing Overhead to the appropriate account.

A. Accounts Payable

B. Accumulated Depreciation

C. Cash

D. Cost of Goods Sold

E. Finished Goods Inventory

F. Materials Inventory

G. Manufacturing Overhead

H. Wages Payable

I. Work in Process Inventory

Answer 1

Journal Entries
S.No.	Account Titles	Debit $	Credit $
1	Materials Inventory ( F )	425,000
	Accounts Payable ( A )		425,000
2	Work in process Inventory ( I )	395,000
	Manufacturing overhead ( G )( 425,000 - 395,000 )	30,000
	Materials Inventory ( F )		425,000
3	Work in process Inventory ( I )( 16,500 x 12 )	198,000
	Manufacturing Overhead (G) ( 2,500 x 12 )	30,000
	Wages Payable (H)		228,000
4	Manufacturing Overhead (G)	110,000
	Accounts Payable (A) and Accumulated Depreciation (B )		110,000
5	Work in process Inventory ( I )	181,500
	Manufacturing Overhead ( G)		181,500
	(16,500 x 220,000 ) / 20,000
6	Finished Good Inventory ( E )	699,500
	Work in process Inventory ( I )		699,500
	(0 + 395,000 + 198,000 + 181,500 - 75,000 )
7	Manufacturing Overhead ( G )	11,500
	Cost of Goods Sold (D)		11,500
	(181,500 - (30,000 + 30,000 + 110,000 ) )