Question

Forest Components makes aircraft parts. The following transactions occurred in July:

Purchased $16,940 of materials on account.

Issued $16,870 in direct materials to the production department.

Issued $1,280 of supplies from the materials inventory.

Paid for the materials purchased in transaction (1) using cash.

Returned $2,150 of the materials issued to production in (2) to the materials inventory.

Direct labor employees earned $32,800, which was paid in cash.

Paid $17,380 for miscellaneous items for the manufacturing plant. Accounts Payable was credited.

Recognized depreciation on manufacturing plant of $35,700.

Applied manufacturing overhead for the month.

Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $435,700. Estimated overhead for the year was $405,201.

The following balances appeared in the inventory accounts of Forest Components for July:

	Beginning			Ending
Materials Inventory		?		$	12,560
Work-in-Process Inventory		?			10,540
Finished Goods Inventory	$	2,630			7,020
Cost of Goods Sold		?			74,700

Required:

a. Prepare journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Solution a:

Journal Entries - Forest Components
Event	Particulars	Debit	Credit
1	Material inventory Dr	$16,940.00
	To Accounts payable		$16,940.00
	(To record purchase of material)
2	Work-In-Process Inventory Dr	$16,870.00
	To Material inventory		$16,870.00
	(To record issue of material into production)
3	Manufacturing overhead Dr	$1,280.00
	To Material inventory		$1,280.00
	(To record issue of supplies from inventory)
4	Accounts payable Dr	$16,940.00
	To Cash		$16,940.00
	(To record payment to A/P)
5	Material inventory Dr	$2,150.00
	To Work-In-Process Inventory		$2,150.00
	(To record return of raw material)
6	Work-In-Process Inventory Dr	$32,800.00
	To Cash		$32,800.00
	(To record payment of direct labor)
7.1	Manufacturing overhead Dr	$17,380.00
	To Accounts payable		$17,380.00
	(To record purchase of miscellenous items for manufacturing plant)
7.2	Accounts payable Dr	$17,380.00
	To Cash		$17,380.00
	(To record payment of miscellenous items procured)
8	Manufacturing overhead Dr	$35,700.00
	To Accumulated depreciation		$35,700.00
	(To record depreciation on manufacturing plant)
9	Work-In-Process Inventory Dr ($32,800*93%)	$30,504.00
	To Manufacturing overhead		$30,504.00
	(Being manufacturing overhead applied)