Question

June production generated the following activity in Axle Chassis Company's Work in Process Inventory account:

June 1 balance - $25,000

Direct Materials used - 43,000

Direct labor assigned to jobs - 40,000

Manufacturing overhead allocated to jobs - 16,000

Additionally, Axle has completed Jobs 142 and 143, with total costs of $38,000 and $37,000, respectfully.

Requirements: 1) Prepare the journal entry for production completed in June. 2) Open a T-account for Work in Process Inventory. Post the journal entry made in Requirement 1. Compute the ending balance in the Work in Process Inventory account on June 30. 3) Prepare the journal entry to record the sale on account of Job 143 for $48,000. Also prepare the journal entry to record Cost of Goods Sold for Job 143. 4) What is the gross profit on Job 143?

Answer 1

Required 1 :
Date	General Journal	Debit	Credit
Jun-30	Finished goods Inventory (38,000+37,000)	$ 75,000
	Work in process Inventory		$ 75,000
	(To record Completed Jobs 142 and 143 )

Required 2 :
Work In Process Inventory
Beginning Balances	$ 25,000	$ 75,000	Transferred to Finished goods
Direct Material	$ 43,000
Direct Labor	$ 40,000
Manufacturing Overhead	$ 16,000
Ending Balance (Bal in Fig)	$ 49,000

Required 3 :
Date	General Journal	Debit	Credit
Jun-30	Accounts receivable	$ 48,000
	Sales		$ 48,000
	(To record Sale on Account of Job 143 )
Date	General Journal	Debit	Credit
Jun-30	Cost of goods sold	$ 37,000
	Finished goods Inventory		$ 37,000
	(To record Cost of goods sold for Job 143 )

Required 4 :
Gross Profit for job 143 = $ 11,000
Explanation :
To Calculate the Gross Profit for Job 143 :
Particulars	Amount($)
Sales	$ 48,000
Less: Cost of goods sold	($37,000)
Gross Profit	$ 11,000