Question

Prepare summary journal entries to record the following transactions for a company in its first month of operations.

1. Raw materials purchased on account, $88,000.
2. Direct materials used in production, $39,000. Indirect materials used in production, $17,800.
3. Paid cash for factory payroll, $55,000. Of this total, $39,000 is for direct labor and $16,000 is for indirect labor.
4. Paid cash for other actual overhead costs, $7,500.
5. Applied overhead at the rate of 120% of direct labor cost.
6. Transferred cost of jobs completed to finished goods, $60,600.
7. Sold jobs on account for $86,500. The jobs had a cost of $60,600.

Answer 1

No.	Accounting titles & Explanations		Debit	Credit
1.	Raw materials inventor		88,000
	Accounts payable			88,000
2.	Work in process inventory		39,000
	Factory overhead		17,800
	Raw materials inventory			56,800
3.	work in process inventory		39,000
	Factory overhead		16,000
	cash			55000
4.	Factory overhead		7,500
	cash			7,500
5.	Work in process inventory		46,800
	Factory overhead (39000*120%)			46,800
6.	finished goods inventory		60,600
	Work in process inventory			60,600
7.	Accounts receivable		86,500
	sales			86,500
8.	cost of goods sold		60,600
	Finished goods inventory			60,600