Question

Prepare the journal entries to record the following transactions for Kilts & More, a company that produces hand-sewn kilts to Americans celebrating at Irish Festivals around the country.

a. Purchased $140,000 of material (3,500 yards) in cash.
b. Issued $120,000 of material (3,000 yards) into production.
c. Paid $45,000 cash in production labor costs.
d. Applied overhead at the predetermined rate of $12 per yard.
e. Incurred $42,000 of actual overhead costs, paid in cash. (Assume any difference between actual and applied overhead costs is adjusted directly to cost of goods sold.)
f. Completed 5,000 kilts. (Approximately $51,000 of inventory remains in process, so the cost of each helmet is approximately $______.)
g. Sold 4,500 kilts at $80.00 per unit. (All proceeds were collected in cash.)
h. Disposed of any over- or under-applied overhead cost.  

Answer 1

Journal Entries
date	Account titles& Explanation	Debit	credit
a. Purchased $140,000 of material (3,500 yards) in cash
	Raw materials A/c	$140000
	To cash A/c		$140000
	(Being Pourchase of raw materials Has been recorded)
(b) Issued $120,000 of material (3,000 yards) into production
	Work In Process A/c	$120000
	To Raw materials A/c		$120000
	(being raw materials issued for production has been recorded)
c. Paid $45,000 cash in production labor costs.
	labour costs A/c	$45000
	To cash A/c		$45000
	(being Payment of labour cost has been recorded)
	Work In Process A/c	$45000
	To Labour costs A/c		$45000
	(Being labour costs has been transferred to Work in process)
(d) Applied overhead at the predetermined rate of $12 per yard.
	Work In Process A/c   (3000*$12)	$36000
	To manufacturing Over head A/c		$36000
	(being Manufactruing over head appied has been recorded)
(e ) Incurred $42,000 of actual overhead costs, paid in cash
	manufacturing Over head A/c	$42000
	To cash A/c		$42000
	(being cash paid for manufacturing over head has been recorded)
(f)   Completed 5,000 kilts
(Approximately $51,000 of inventory remains in process
Total Cost =$120000+45000+36000-51000 =150000
Cost of Each Helmet =$150000/5000=$30
	Finished goods A/c	$150000
	To Work In Process A/c		$150000
	(being Finished goods has been terefered from Work in process)
(g) Sold 4,500 kilts at $80.00 per unit.
	Cash A/c	$135000
	To Sales A/c (4500*$80)		$135000
	(Being Sales made has been recorded)
(h) Disposed of any over- or under-applied overhead cost
Under applied Over head cost =$42000-$36000 =$6000
	Cost of goods Sold A/c	$6000
	To manufacturing overhead A/c		$6000
	(being under applied overhead cost has ben recorded)