Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October:

1. Raw materials purchased on account, $211,000.
2. Raw materials used in production, $191,000 ($152,800 direct materials and $38,200 indirect materials).
3. Accrued direct labor cost of $50,000 and indirect labor cost of $20,000.
4. Depreciation recorded on factory equipment, $106,000.
5. Other manufacturing overhead costs accrued during October, $129,000.
6. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 76,300 machine-hours were used in October.
7. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
8. Jobs that had cost $451,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 34% above cost.

Required:

1. Prepare journal entries to record the transactions given above.

2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35,000.

Answer 1

Answer
1)
	Account Title	Debit	Credit
a	Raw Materials	$     211,000
	Accounts Payable		$ 211,000
b	Work in Process	$     152,800
	Manufacturing Overhead	$       38,200
	Raw Materials		$ 191,000
c	Work in Process	$       50,000
	Manufacturing Overhead	$       20,000
	Salaries and Wages Payable		$   70,000
d	Manufacturing Overhead	$     106,000
	Accumulated Depreciation		$ 106,000
e	Manufacturing Overhead	$     129,000
	Accounts Payable		$ 129,000
f	Work in Process (76300*8)	$     610,400
	Manufacturing Overhead		$ 610,400
g	Finished Goods	$     512,000
	Work in Process		$ 512,000
h1	Cost of Goods Sold	$     451,000
	Finished Goods		$ 451,000
h2	Accounts Receivable (451000+34%)	$     604,340
	Sales		$ 604,340
2)
Manufacturing Overhead
b	$                                                             38,200	$     610,400	f
c	$                                                             20,000
d	$                                                           106,000
e	$                                                           129,000
End Bal		$     317,200
Work in Process
Beg Bal	35000
b	$                                                           152,800	$     512,000	g
c	$                                                             50,000
f	$                                                           610,400
End Bal	$                                                           336,200