Question

Yurman Inc. uses a job-order costing system. During the month of May, the following transactions occurred:

May	1	Purchased materials on account for $29,740.
	3	Requisitioned materials totaling $24,460 for use in production. Of the total, $9,190 was for Job 58, $8,910 for Job 59, and the remainder for Job 60.
	31	Incurred direct labor for the month of $34,010, with an average wage of $19 per hour. Job 58 used 780 hours; Job 59, 610 hours; and Job 60, 400 hours.
	31	Incurred and paid actual overhead of $17,850 (credit Various Payables).
	31	Charged overhead to production at the rate of $4.70 per direct labor hour.
	31	Completed and transferred Jobs 58 and 59 to Finished Goods.
	31	Sold Job 57 (see beginning balance of Finished Goods) and Job 58 to their respective clients on account for a price of cost plus 40%.

Beginning balances as of May 1 were:

Materials	$2,350
Work in Process	0
Finished Goods (Job 57)	25,580

	Required:
1.	Prepare journal entries for transactions from May 1 through 31.
2.	Prepare brief job-order cost sheets for Jobs 58, 59, and 60.
3.	Calculate the ending balance of Raw Materials.
4.	Calculate the ending balance of Work in Process.
5.	Calculate the ending balance of Finished Goods.

Answer 1

1.

Date	General Journal	Debit	Credit
May-01	Materials	29740
	Accounts payable		29740
	(To record materials purchased on account)
May-03	Work in process	24460
	Materials		24460
	(To record direct materials requisitioned)
May-31	Work in process	34010
	Wages payable		34010
	(To record direct labor costs incurred)
May-31	Factory overheads	17850
	Various payables		17850
	(To record overhead costs incurred and paid)
May-31	Work in process (1790 x $4.70)	8413
	Factory overhead		8413
	(To record factory overheads applied)
May-31	Finished goods ($27676 + $23367)	51043
	Work in process		51043
	(To record jobs completed and transferred)
May-31	Accounts receivable ($35812 + $38746)	74558
	Sales		74558
	(To record sales)
May-31	Cost of goods sold ($25580 + $27676)	53256
	Finished goods		53256
	(To record the cost of goods sold)

Working:

Sales price:
	Job 57	Job 58
Job cost	25580	27676
Markup 40%	10232	11070.4
Sale price $	35812	38746.4

Note: Sales price is rounded off to the nearest whole dollar.

2.

Job Cost Sheet
	Job 58	Job 59	Job 60
Direct materials	9190	8910	6360
Direct labor	14820	11590	7600
Factory overheads	3666	2867	1880
Total cost $	27676	23367	15840

3. Ending balance of raw materials: Beginning balance $2350 + Purchases $29740 - Requistions $24460 = $7630

4. Ending balance of work in process: Beginning balance $0 + Direct materials $24460 + Direct labor $34010 + Factory overheads $8413 - Jobs completed $51043 = $15840 i.e. cost of job 60

5. Ending balance of finished goods: Beginning balance $25580 + Completed and transferred $51043 - Cost of jobs sold $53256 = $23367 i.e. cost of job 59