Question

4-27 Job costing, journal entries. Duchess ltd. manufactures and insta lls kitchen cabinetry. It
uses normal job costing with two direct cost categories (direct materials and direct manufacturing labour)
and one indirect cost pool for MOH, applied on the basis of MH. At the beginning of the year, the company
ASSIGNMENT MATERIAL e 129
estimated that it would work 980,000 MH and had budgeted $73,500,000 for MOH. The following data
(in$ millions) pertain to operations for the year 2019:
Materials control (beginning balance), December 31, 2018
Work-in-process control (beginning balance), December 31, 2018
Finished goods control (beginning balance}, December 31, 2018
Materials and supplies purchased on account
Direct materials used
Indirect materials (supplies) issued to various production departments
Direct manufacturing labour
Indirect manufacturing labour incurred by various departments
Depreciation on plant and manufacturing equipment
Miscellaneous manufacturing overhead incurred (credit Various liabilities;
ordinarily would be detailed as repairs, utilities, etc.}
$ 6.0
1.8
7.2
238
194
27
123
19
21
9
Manufacturing overhead allocated (972,000 actual MH) ?
Cost of goods manufactured 374.3
Revenues 512
Cost of goods sold 368.4
Required
1. Prepare general journal entries. Post to T-accounts. What is the ending balance of Work-in-Process
Control?
2. Show the journal entry for disposing of over- or underallocated manufacturing overhead directly as a
year-end write-off to Cost of Goods Sold. Post the entry to T-accounts.

Answer 1

Journal entries
Materials	238
to accounts payable		238
WIP	194
Manufacturing overheads	27
To Materials		221
Direct labor	123
Indirect labor	19
To cash		142
WIP	123
Manufacturing overheads	19
To Direct labor		123
To indirect labor		19
Depreciation	21
To accumulated depreciation		21
Misc expense	9
To cash		9
Manufacturing overheads	30
To depreciation		21
to Misc expense		9
WIP	72.9
To manufacturing overheads		72.9
Finished goods	374.3
To WIP		374.3
Accounts receivables	512
To Sales		512
Cost of goods sold	368.4
To Finished goods		368.4

Allocation rate
	=estimated overhead/machine hours
	=73500000/980000
	75
Actual	972000 machine hours
Applied overheads	=972000*75
	72900000
	72.9

Materials
	Dr		Cr
Beg balance	6	WIP	194
Materials purchase	238	Manufacturing overhead	27
		Balance	23
	244		244
Labor
	Dr		Cr
Direct labor	123	WIP	123
Indirect labor	19	Manufacturing overhead	19
	142		142
Manufacturing overhead
	Dr		Cr
Indirect materials	27	WIP	72.9
Indirect labor	19	Cost of goods sold	3.1
Depreciation	21
Misc	9
	76		76

Work in progress
	Dr		Cr
Beg balance	1.8	Cost of goods manufactured	374.3
Direct materials	194	Balance	17.4
Direct labor	123
Manufacturing overhead	72.9
	391.7		391.7
Finished goods
	Dr		Cr
Beg balance	7.2	Cost of goods sold	368.4
Cost of goods manufactured	374.3	Balance	13.1
	381.5		381.5
Cost of goods sold
	Dr		Cr
Finished goods	368.4	income statement	371.5
Manufacturing overheads	3.1
	371.5		371.5
Revenue
	Dr		Cr
Income statement	512	Accounts receivable	512
	512		512

Cost of goods sold	3.1
To Manufacturing overheads		3.1