Question

owder Inc. builds custom conveyor systems for warehouses and distribution centers. During the month of July, the following occurred:

Jul.	1	Purchased materials on account for $42,630.
	2	Requisitioned materials totaling $27,000 for use in production: $12,500 for Job 703 and the remainder for Job 704.
	28	Recorded direct labor payroll for the month of $26,320 with an average wage of $14 per hour. Job 703 required 780 direct labor hours; Job 704 required 1,100 direct labor hours.
	28	Incurred and paid actual overhead of $19,950.
	28	Charged overhead to production at the rate of $10 per direct labor hour.
	30	Completed Job 703 and transferred it to Finished Goods.
	31	Kept Job 704, which was started during July, in process at the end of the month.
	31	Sold Job 700, which had been completed in May, on account for cost plus 30%.

Beginning balances as of July 1 were:

Raw Materials	$6,070
Work in Process (for Job 703)	10,000
Finished Goods (for Job 700)	6,240

	Required:
1.	Prepare the journal entries for July 1 through 28.
2.	Prepare simple job-order cost sheets for Jobs 703 and 704.
3.	Prepare the journal entries for events on July 30 and 31.
4.	Calculate the ending balances of the following: (a) Raw Materials, (b) Work in Process, and (c) Finished Goods.

Answer 1

Solution 1:

Journal entries - Owder Inc.
Date	Particulars	Debit	Credit
1-Jul	Raw material inventory Dr	$42,630.00
	To Accounts payable		$42,630.00
	(To record purchase of raw material)
2-Jul	Work In Process Dr	$27,000.00
	To Raw material inventory		$27,000.00
	(To record raw material introduced in production)
28-Jul	Work In Process Dr	$26,320.00
	To Factory Wages		$26,320.00
	(Being direct labor charged to production)
28-Jul	Factory overhead Dr	$19,950.00
	To Cash		$19,950.00
	(To record payment of overhead)
28-Jul	Work In Process Dr (1880*$10)	$18,800.00
	To Factory Overhead		$18,800.00
	(To apply factory overhead on production)

Solution 2:

Job Order Cost sheet
Particulars	Job 703	Job 704
Beginning balance	$10,000.00
Direct material	$12,500.00	$14,500.00
Direct labor	$10,920.00	$15,400.00
Factory overhead	$7,800.00	$11,000.00
Total	$41,220.00	$40,900.00

Solution 3:

Journal entries - Owder Inc.
Date	Particulars	Debit	Credit
30-Jul	Finished goods inventory Dr	$41,220.00
	To Work in process		$41,220.00
	(To record transfer of job 703 to finished goods)
31-Jul	No Entry (For Job 704 kept in process)
31-Jul	Accounts receivables Dr	$8,112.00
	To Sales Revenue		$8,112.00
	(To record sale of job 700)
31-Jul	Cost of goods sold Dr	$6,240.00
	To Finished goods inventory		$6,240.00
	(To record cost of goods sold)

Solution 4:

Raw Materials
Date	Particulars	Debit	Date	Particulars	Credit
1-Jul	Beginning balances	$6,070.00	2-Jul	Work In Process	$27,000.00
1-Jul	Accounts payable	$42,630.00		Ending balance	$21,700.00
	Total	$48,700.00		Total	$48,700.00

Work In Process
Date	Particulars	Debit	Date	Particulars	Credit
1-Jul	Beginning balances	$10,000.00	30-Jul	Finished goods inventory	$41,220.00
2-Jul	Raw material inventory	$27,000.00		Ending balance	$40,900.00
28-Jul	Factory Wages	$26,320.00
28-Jul	Factory overhead	$18,800.00
	Total	$82,120.00		Total	$82,120.00

Finished goods inventory
Date	Particulars	Debit	Date	Particulars	Credit
1-Jul	Beginning balances	$6,240.00	31-Jul	Cost of goods sold	$6,240.00
30-Jul	Work In Process	$41,220.00		Ending balance	$41,220.00
	Total	$47,460.00		Total	$47,460.00