Question

PROBLEM IV

INSTRUCTIONS

1. Journalize the entries to record the transactions indentified above.

2. Determine the account balances for Work in Process and Finished Goods.

3. Prepare a schedule of unfinished jobs to support the balances in the work in process account

4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods accounts.

Derby Music Company specializes in producing and packaging compact discs (CDs) for the music recording industry. Derby use a job order cost system. The following data summarize the operations related to production for March, the first month of operations:

a. Materials purchased on account. $15,500.

b. Materials requisitioned and labor used.

?Materials? Factory Labor

Job 100? $2,650?? $1,770

Job 101? 1,240?? 650

Job 102? 980?? 420

Job 103? 3,420?? 1,900

Job 104? 1,000?? 500

Job 105? 2,100?`?? 1,760

For general factory use? 450?? 650

c. Factory overhead costs incurred on account. $2,700

d. Depreciation of machinery. $1,750

e. Factory overhead is applied at a rate of 70% of direct labor cost.

f. Jobs completed: Nos. 100, 101, 102, 104

g. Jobs 100, 101, 102 were shipped and customers were billed for $8,100, $3,800 and $3,500 respectively.

Answer 1

Date	Account Description	Debit	Credit
a	Material Inventory	$        15,500
	Accounts payable		$        15,500
	(To record Purchase of Inventory)
b1	WIP-Job 100	$          2,650
	WIP-Job 101	$          1,240
	WIP-Job 102	$              980
	WIP-Job 103	$          3,420
	WIP-Job 104	$          1,000
	WIP-Job 105	$          2,100
	Material Inventory		$        11,390
	(To record issue of material to various jobs)
b2	WIP-Job 100	$          1,770
	WIP-Job 101	$              650
	WIP-Job 102	$              420
	WIP-Job 103	$          1,900
	WIP-Job 104	$              500
	WIP-Job 105	$          1,760
	Wage expenses		$          7,000
	(To record use of labour to various jobs)
b3	Factory Overhead	$          1,100
	Material Inventory		$              450
	Wage expenses		$              650
	(To record Factory Expenses)
c	Factory Overhead	$          2,700
	Accounts payable		$          2,700
	(To record Factory Expenses)
d	Factory Overhead	$          1,750
	Depreciation on Machinery		$          1,750
	( To record Depreciation to Factory Overhead)
e	WIP-Job 100 (1770*70%)	$          1,239
	WIP-Job 101 (650*70%)	$              455
	WIP-Job 102 (420*70%)	$              294
	WIP-Job 103 (1900*70%)	$          1,330
	WIP-Job 104 (500 *70%)	$              350
	WIP-Job 105 (1760*70%)	$          1,232
	Factory Overhead		$          4,900
	(To apply Factory overhead to Jobs)
f	Finished goods ( Job 100)	$          5,659
	Finished goods ( Job 101)	$          2,345
	Finished goods ( Job 102)	$          1,694
	Finished goods ( Job 104)	$          1,850
	WIP-Job 100		$          5,659
	WIP-Job 101		$          2,345
	WIP-Job 102		$          1,694
	WIP-Job 104		$          1,850
	(to record transfer of cost from WIP to Finished goods)
g1	Accounts Receivable	$        15,400
	Sales Revenue (8100+3800+3500)		$        15,400
	(To record Sales)
g2	Cost of Goods Sold	$          9,698
	Finished goods ( Job 100)		$          5,659
	Finished goods ( Job 101)		$          2,345
	Finished goods ( Job 102)		$          1,694

2.

Account Balance
Finished Goods	$    1,850.00
WIP	$ 11,742.00

3.

Schedule of WIP
	Material	Labour	Overhead	Total Cost
WIP-Job 103	$    3,420.00	$ 1,900.00	$ 1,330.00	$    6,650.00
WIP-Job 105	$    2,100.00	$ 1,760.00	$ 1,232.00	$    5,092.00
				$ 11,742.00

4.

Schedule of Finished Goods
	Material	Labour	Overhead	Total Cost
WIP-Job 100	$    2,650.00	$ 1,770.00	$ 1,239.00	$    5,659.00
WIP-Job 101	$    1,240.00	$     650.00	$     455.00	$    2,345.00
WIP-Job 102	$        980.00	$     420.00	$     294.00	$    1,694.00
WIP-Job 104	$    1,000.00	$     500.00	$     350.00	$    1,850.00
				$ 11,548.00

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