Question

Philippine-based question

The Alexis Company had the following inventories on Aug 1 of the current year:

Finished goods	Php 25000
Work in process - job 401	Php 7,500
work in process - job 402	Php 11,000
materials inventory	Php 22,000

The following information pertains to December operations:

1. Materials Purchased on account, P28,000
2. Materials issued for production, P25,000. Of this amount, P3,000 was for indirect materials; the difference was distributed; P5,500 to Job 401; P7,000 to 402; and P9,500 to 403.
3. Materials returned to the warehouse from the factory, P800, of which P300 was for indirect materials, the balance from Job 403.
4. Materials returned to vendors P1,000
5. Payroll after deducting P3,025 for withholding taxes, P1,600 for SSS Premiums, P375 for Medicare and P1,200 for Pag-ibig, was P32,800. The payroll due the employees was paid during the month.
6. The payroll was distributed as follows: P10,400 to Job 401; P12,500 to Job 402, P10,500 to Job 403 and the balance represents indirect labor.
7. The share of the employer payroll was recorded – P2,000 for SSS Premiums, P375 for Medicare and P1,200 for Pag-ibig
8. Factory overhead, other than previously mentioned, amounted to P15,000. Included in this figure were P3,000 for depreciation of factory building and equipment, and P950 for expired insurance on the factory. The remaining overhead was unpaid at the end of August.
9. Factory overhead was applied to production at the rate of 80% of direct labor cost
10. Jobs 401 & 402 were completed & transferred to the finished goods warehouse.
11. Job 401 was shipped and billed at a gross of 40% of the cost
12. Cash collections from Accounts Receivable during August were P70,000

Requirements:

Prepare Journal Entries to record the above transactions.

Answer 1

WIP Inventory Details	All Amount Php
Job No	Job 401	Job 402	Job 403	Total
Opening balance
Materials	3,000.00	5,600.00		8,600.00
Labor	2,500.00	3,000.00		5,500.00
Factory Overhead	2,000.00	2,400.00		4,400.00
Total Opening Balance	7,500.00	11,000.00	-	18,500.00
Cost Added During Month
Direct Materials	5,500.00	7,000.00	9,500.00	22,000.00
Direct Labor	10,400.00	12,500.00	10,500.00	33,400.00
Factory Overhead applied @80% of Direct Labor	8,320.00	10,000.00	8,400.00	26,720.00
Total Cost added during Month	24,220.00	29,500.00	28,400.00	82,120.00
Total Job Cost with Opening Balance cost	31,720.00	40,500.00	28,400.00	100,620.00
Job status at month end	shipped	FG	WIP

	Journal Entries to record transactions:
Sr No	Account Title	Dr Php	Cr Php
1	Materials Inventory	28,000.00
	Accounts Payable		28,000.00
	(purchase of materials on a/c)
2	Manufacturing Overhead Account	3,000.00
	WIP Job # 401	5,500.00
	WIP Job # 402	7,000.00
	WIP Job # 403	9,500.00
	Materials Inventory		25,000.00
	( Issue of Direct and Indirect Materials to MFg OH & WIP a/cs)
3	Manufacturing Overhead Account	9,175.00
	WIP Job # 401	10,400.00
	WIP Job # 402	12,500.00
	WIP Job # 403	10,500.00
	Withholding Taxes Payable		3,025
	SSS Premium Payable -Employee		1,600
	Medicare Payable -Employee		375
	Pag-ibig Payable -Employee		1,200
	SSS Premium Payable -Employer		2,000
	Medicare Payable -Employer		375
	Pag-ibig Payable -Employer		1,200
	Wages Payable		32,800
	( Payroll expenses recorded for WIP and Mfg OH with liability a/cs )
4	Manufacturing Overhead Account	3,000
	Accumulated Depreciation -Factory Building &Equipment		3,000
	Manufacturing Overhead Account	950
	Prepaid Insurance		950
	Manufacturing Overhead Account	11,050
	Accounts Payable		11,050
	( Other Factory Overheads recorded)
5	WIP Job # 401	8,320
	WIP Job # 402	10,000
	WIP Job # 403	8,400
	Manufacturing Overhead Account		26,720
	( Mfg OH appled to Jobs @80% of Direct Labor cost)
6	Finished Goods Inventory	72,220
	WIP Job # 401		31,720
	WIP Job # 402		40,500
	( Job 401 & 402 transferred to FG inventory)
7	Sales		44,408
	Accounts Receivable	44,408
	Cost of Goods Sold	31,720
	Finished Goods Inventory		31,720
	( Sale of Job 401 with 40% mark up)
8	Cash	70,000
	Accounts Receivable		70,000
	( Cash collection from AR in August)

**********************************************************
Please up vote....Its very usefull for us .....Thank you .....So Much......If any qurries comment below....I will resolve ASAP....Until u got.....