Question

Sunset Products manufactures skateboards. The following transactions occurred in March:

Purchased $22,000 of materials on account.

Issued $1,200 of supplies from the materials inventory.

Purchased $25,400 of materials on account.

Paid for the materials purchased in transaction (1) using cash.

Issued $30,400 in direct materials to the production department.

Incurred direct labor costs of $27,000, which were credited to Wages Payable.

Paid $21,900 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.

Applied overhead on the basis of 125 percent of direct labor costs.

Recognized depreciation on manufacturing property, plant, and equipment of $5,400.

The following balances appeared in the accounts of Sunset Products for March:

	Beginning			Ending
Materials Inventory	$	9,600			?
Work-in-Process Inventory		16,900			?
Finished Goods Inventory		65,400		$	36,900
Cost of Goods Sold					73,400

Required:

a. Prepare journal entries to record the transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Required journal entries are as prepared below:
S.No	Particulars	L.F	Amount ($)	Amount ($)
1	Materials inventory		22,000
	Accounts Payable			22,000
	(For Material Purchased )
2	Manufacturing Overhead Control		1,200
	Material			1,200
	(For supplies issued from Inventory)
3	Materials inventory		25,400
	Accounts Payable			25,400
	(For Material Purchased )
4	Accounts Payable		22,000
	Cash			22,000
	(for paid for material purchased)
5	Work in Process-Direct material		30,400
	Material			30,400
	(For material issued to production)
6	Work in Process-Direct labour		27,000
	Wages Payable			27,000
	(For direct labour cost incurred)
7	Manufacturing Overhead Control		21,900
	cash			21,900
	(for manufacturing cost incurred)
8	Work in process-overhead (27000*125%)		33,750
	Applied manufacturing overhead			33,750
	(For manufacturing overhead applied)
9	Manufacturing Overhead Control		5,400
	Acc dep			5,400
	(for depreciation recorded)