Question
In: Accounting
The following costs were incurred in February by Container Corp., which produces customized steel storage bins:...
The following costs were incurred in February by Container Corp., which produces customized steel storage bins:
| Direct material purchased on account | $136,800 | |
| Direct material used for jobs: | ||
| Job #217 | $80,640 | |
| Job #218 | 12,960 | |
| Other jobs | 96,480 | 190,080 |
| Direct labor costs for month: | ||
| Job #217 | $18,720 | |
| Job #218 | 25,200 | |
| Other jobs | 35,280 | 79,200 |
| Actual overhead costs for February | 396,000 |
The balance in Work in Process Inventory on February 1 was $30,240, which consisted of $20,160 for Job #217 and $10,080 for Job #218. The February beginning balance in Direct Material Inventory was $80,280. Actual overhead is applied to jobs at a rate of $4.95 per dollar of direct labor cost. Job #217 was completed and transferred to Finished Goods Inventory during February. Job #217 was delivered to the customer at the agreed-upon price of cost plus 35 percenta. Prepare journal entries to record the preceding information.
a. Prepare journal entries to record the preceding information.
b.Determine the February ending balance in WIP Inventory.
$Answer
c. How much of the balance determined in part (b) relates to Job
#218? $Answer
Solutions
Expert Solution
a.
| No. | General Journal | Debit | Credit |
| 1 | Raw materials inventory | 136800 | |
| Accounts payable | 136800 | ||
| (To record raw materials purchased on account) | |||
| 2 | WIP-Job #217 | 80640 | |
| WIP-Job #218 | 12960 | ||
| WIP-Other jobs | 96480 | ||
| Direct material inventory | 190080 | ||
| (To record the direct materials issued) | |||
| 3 | WIP-Job #217 | 18720 | |
| WIP-Job #218 | 25200 | ||
| WIP-Other jobs | 35280 | ||
| Cash/Accounts payable | 79200 | ||
| (To record the labor costs) | |||
| 4 | Manufacturing overhead | 396000 | |
| Various accounts | 396000 | ||
| (To record the actual overhead cost) | |||
| 5 | WIP-Job #217 ($4.95 x $18720) | 92664 | |
| WIP-Job #218 ($4.95 x $25200) | 124740 | ||
| WIP-Other jobs ($4.95 x $35280) | 174636 | ||
| Manufacturing overhead | 392040 | ||
| (To record OH applied) | |||
| 6 | Finished goods inventory ($20160 + 80640 + 18720 + 92664) | 212184 | |
| WIP-Job #217 | 212184 | ||
| (To record the completion of Job 217) | |||
| 7 | Cash/Accounts receivable | 286448 | |
| Sales revenue (1.35 x $212184) | 286448 | ||
| (To record sales) | |||
| 8 | Cost of goods sold | 212184 | |
| Finished goods inventory | 212184 | ||
| (To record the cost of sales) |
b. February ending balance in WIP inventory: $479,376
c. Balance relating to Job #218: $172,980
Working:
| Job #218 | 172980 |
| Other jobs | 306396 |
| Total WIP $ | 479376 |
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