Question

Figure 5-14
Deluxe Design Company makes custom furniture. On December 1, there were two jobs in process, Job 683, with a cost of $14,200 and Job 684 with a cost of $23,500. Jobs 685, 686, and 687 were started during the month of December. Data on costs added during the month are as follows:

	Job #683		Job #684		Job #685		Job #686		Job #687
Direct materials	$11,000		$8,000		$31,400		$16,700		$6,000
Direct labor	$21,000		$6,000		$12,300		$8,450		$2,500

Overhead is applied to production at the rate of 80% of direct labor cost. Job 685 was completed on December 17. Job 684 was completed on December 21 and the client was billed at cost plus 45%. All other jobs remained in process.

Problem 5-23

Refer to Figure 5-14.

Prepare the journal entries to record the following:

The actual overhead for December was $41,100

Requisitioning of raw materials

Direct labor costs

Applied overhead

Transfer to finished goods

Sale of finished goods (assume sale was made on account)

Closing underapplied/overapplied variance (all variances are immaterial)

A
B
C
D
E-cost
E-sale
F

Answer 1

Journal Entry
Date	Particulars	Dr. Amt	Cr. Amt
a.	WIP	73,100
	Direct Material		73,100
	(Record the material issued)
b.	WIP	50,250
	Wages Payable		50,250
	(Record the factory labor used)
c.	WIP	40,200
	Factory Overheads		40,200
	(Records the Factory Overehead charged to WIP)
d.	WIP	95,840
	Finished Goods		95,840
	(Record the Job 684 & 685 Completed and transferred to Finished goods)
e-1	Cost of Goods Sold	42,300
	Finished Goods		42,300
	(record the cost of goods sold)
e-2	Accounts receivables	61,335
	Sales		61,335
	(record the Job 684 sold)
	Sale of Job 684 = $42,300 X 145% = $61,335
f.	Cost of Goods Sold	900
	Factory Overhead		900
	(record the underapplied overhead)
	Underapplied Overhead = $41,100 - $40,200 = $900

	Job
	683	684	685	686	687	Total
Beginning Balance	14,200	23,500	-	.	-	37,700
Direct Material	11,000	8,000	31,400	16,700	6,000	73,100
Direct Labor	21,000	6,000	12,300	8,450	2,500	50,250
Factory Overhead - 80% of DL	16,800	4,800	9,840	6,760	2,000	40,200
Total	63,000	42,300	53,540	31,910	10,500	201,250
		Fin.	Fin.