Question

Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred:

1. Materials were purchased on account for $45,620.
2. Materials totaling $40,980 were requisitioned for use in producing various jobs.
3. Direct labor payroll for the month was $19,200 with an average wage of $12 per hour.
4. Actual overhead of $8,850 was incurred and paid in cash.
5. Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour.
6. Completed jobs costing $60,000 were transferred to Finished Goods.
7. Jobs costing $58,000 were sold on account for $ 73,750. Make the entry to record the revenue from the sale first, followed by the entry to record the cost of the jobs.

Beginning balances as of July 1 were:

Materials Inventory	$1,100
Work-in-Process Inventory	3,400
Finished Goods Inventory	2,640

Required:

1. Prepare the journal entries for the preceding events.

a.
b.
c.
d.
e.
f.
g (1).
g (2).

2. Calculate the ending balances of:

a. Materials Inventory	$
b. Work-in-Process Inventory	$
c. Overhead Control	$
d. Finished Goods Inventory	$

Answer 1

1
a	Materials	45620
	Accounts Payable		45620
b	Work in Process	40980
	Materials		40980
c	Work in Process	19200
	Wages payable		19200
d	Overhead Control	8850
	Cash		8850
e	Work in Process	8640		=(19200/12)*5.40
	Overhead Control		8640
f	Finished goods	60000
	Work in Process		60000
g(1)	Accounts Receivable	73750
	Sales revenue		73750
g(2)	Cost of goods sold	58000
	Finished goods		58000
	2
	a. Materials Inventory	4640		=45620-40980
	b. Work-in-Process Inventory	8820		=40980+19200+8640-60000
	c. Overhead Control	210		=8850-8640
	d. Finished Goods Inventory	2000		=60000-58000