Question

Required information

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The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.

	April 30				May 31
Inventories
Raw materials	$	28,000			$	52,000
Work in process		9,000				21,000
Finished goods		61,000				33,300
Activities and information for May
Raw materials purchases (paid with cash)						181,000
Factory payroll (paid with cash)						200,000
Factory overhead
Indirect materials						10,000
Indirect labor						46,000
Other overhead costs						102,500
Sales (received in cash)						1,300,000
Predetermined overhead rate based on direct labor cost						55	%

Compute the following amounts for the month of May using T-accounts.

Cost of direct materials used.

Cost of direct labor used.

Cost of goods manufactured.

Cost of goods sold.*

Gross profit.

Overapplied or underapplied overhead.

  
*Do not consider any underapplied or overapplied overhead.

Raw Materials (RM)					Work in Process (WIP)
	0					0
Finished Goods (FG)					Factory Overhead
	0
						0

Income statement (partial)
	$0

Raw materials purchases for cash.

Direct materials usage.

Indirect materials usage.

  
Prepare journal entries for the above transactions for the month of May.
Journal entry worksheet

Record raw material purchases for cash.

Transaction	General Journal	Debit	Credit
1

Record the entry to assign direct materials to jobs.

Transaction	General Journal	Debit	Credit
2

Record the entry to assign indirect materials to jobs.

Transaction	General Journal	Debit	Credit
3

Direct labor usage.

Indirect labor usage.

Total payroll paid in cash.

Prepare journal entries for the above transactions for the month of May.

Record the entry for direct labor usage.

Transaction	General Journal	Debit	Credit
1

Record the entry for indirect labor usage.

Transaction	General Journal	Debit	Credit
2

Record the entry for the cash payment of total factory payroll.

Transaction	General Journal	Debit	Credit
3

Incurred other overhead costs (record credit to Other Accounts).

Application of overhead to work in process.

Prepare journal entries for the above transactions for the month of May.

Record other Factory overhead costs (excluding indirect materials and indirect labor). Record credit to Other Accounts.

Transaction	General Journal	Debit	Credit
1

Record the application of overhead to work in process.

Transaction	General Journal	Debit	Credit
2

Answer 1

Raw Materials					Work in process
RM-April 30	28,000				WIP-April30	9,000
purchases	181,000				DM used	147,000
		10,000	ind materials		DL used	154,000	373,700	cost of goods mfg
		147,000	DM used		OH applied	84700
RM-May 31	52,000				WIP-may 31	21,000
Facotry payroll					finished goods
Factory	200,000				Fg-april 30	61,000
payroll		46,000	ind labor		Cost of	373,700	401,400	COGS
		154,000	DL used		goods mfg
					end bal	33,300
Factory overhead
ind materials	10,000	84,700	OH applied
ind labor	46,000
other oh costs	102,500
underapp	73,800
income Statement(partial)
Sales			1,300,000
cost of goods sold			401,400
Gross profit			898,600
Trasan	General journal				Debit	Credit
1	Raw materials inventory				181,000
	cash					181,000
2	Work in process inventory				147,000
	Raw materials invnetory					147,000
3	Factory overhead				10,000
	Raw materials inventory					10,000
Trasan	General journal				Debit	Credit
1	Work in process inventory				154,000
	Factory wages payable					154,000
2	Factory overhead				46,000
	Factory wages payable					46,000
3	Factory wages payable				200,000
	cash					200,000
Trasan	General journal				Debit	Credit
1	Factory overhead				102,500
	cash					102,500
	Work in process inventory				84,700
	Factory overhead					84,700