Question

[The following information applies to the questions displayed below.]

Westin Watercraft’s predetermined overhead rate for year 2011 is 200% of direct labor. Information on the company’s production activities during May 2011 follows.

  

a.	Purchased raw materials on credit, $240,000.
b.	Paid $128,700 cash for factory wages.
c.	Paid $15,500 cash to a computer consultant to reprogram factory equipment.
d.	Materials requisitions record use of the following materials for the month.

  

Job 136	$	49,000
Job 137		33,000
Job 138		20,200
Job 139		23,200
Job 140		7,400
Total direct materials		132,800
Indirect materials		20,000
Total materials used	$	152,800

  

e.	Time tickets record use of the following labor for the month.

  

Job 136	$	12,300
Job 137		10,700
Job 138		37,900
Job 139		39,400
Job 140		3,400
Total direct labor		103,700
Indirect labor		25,000
Total	$	128,700

  

f.	Applied overhead to Jobs 136, 138, and 139.
g.	Transferred Jobs 136, 138, and 139 to Finished Goods.
h.	Sold Jobs 136 and 138 on credit at a total price of $545,000.
i.	The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

  

Depreciation of factory building	$	70,000
Depreciation of factory equipment		36,500
Expired factory insurance		11,000
Accrued property tax payable		36,500

  

j.	Applied overhead at month-end to the Goods in Process (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

8.

Required information

Required:
1.	Prepare a job cost sheet for each job worked on during the month. (Omit the "$" sign in your response.)

	Job No. 136	Job No. 137	Job No. 138	Job No. 139	Job No. 140
Materials	$	$	$	$	$
Labor
Overhead
Total cost	$	$	$	$	$

9.

Required information

2.	Prepare journal entries to record the events and transactions a through j. (Omit the "$" sign in your response. )

	General Journal	Debit	Credit
a.	(Click to select)Accounts receivableFactory payrollCashFinished goods inventoryRaw materials inventoryAccounts payableCost of goods soldFactory overhead
	(Click to select)Cost of goods soldCashAccounts payableFactory payrollRaw materials inventoryFactory overheadAccounts receivableFinished goods inventory
b.	(Click to select)SalesFactory overheadFactory payrollCashAccounts payableFinished goods inventoryAccounts receivableGoods in process inventory
	(Click to select)CashFactory payrollSalesGoods in process inventoryAccounts payableFinished goods inventoryAccounts receivableFactory overhead
c.	(Click to select)Factory payrollGoods in process inventoryProperty taxes payableFactory overheadPrepaid insuranceAccounts receivableCashRaw materials inventory
	(Click to select)Raw materials inventoryProperty taxes payableFactory payrollGoods in process inventoryAccounts receivableCashPrepaid insuranceFactory overhead
d.	(Click to select)Factory overheadCashCost of goods soldProperty taxes payableFactory payrollRaw materials inventoryGoods in process inventoryAccounts payable
	(Click to select)Factory overheadCashFactory payrollCost of goods soldGoods in process inventoryAccounts payableRaw materials inventoryProperty taxes payable
	(Click to select)Goods in process inventoryCost of goods soldAccounts payableRaw materials inventoryFactory overheadProperty taxes payableCashFactory payroll
e.	(Click to select)Goods in process inventoryCost of goods soldRaw materials inventoryFinished goods inventoryProperty taxes payableFactory payrollPrepaid insuranceFactory overhead
	(Click to select)Goods in process inventoryFinished goods inventoryFactory payrollRaw materials inventoryPrepaid insuranceFactory overheadCost of goods soldProperty taxes payable
	(Click to select)Raw materials inventoryFactory payrollProperty taxes payableCost of goods soldFactory overheadGoods in process inventoryFinished goods inventoryPrepaid insurance
f.	(Click to select)SalesPrepaid insuranceGoods in process inventoryCost of goods soldFactory payrollRaw materials inventoryFactory overheadFinished goods inventory
	(Click to select)Finished goods inventoryFactory payrollCost of goods soldRaw materials inventoryFactory overheadGoods in process inventorySalesPrepaid insurance
g.	(Click to select)Prepaid insuranceGoods in process inventoryFactory overheadCost of goods soldAccounts receivableProperty taxes payableFactory payrollFinished goods inventory
	(Click to select)Property taxes payableGoods in process inventoryFactory PayrollPrepaid insuranceFactory overheadAccounts receivableFinished goods inventoryCost of goods sold
h.	(Click to select)Goods in process inventoryCost of goods soldAccounts receivablePrepaid insuranceFinished goods inventoryFactory payrollSalesFactory overhead
	(Click to select)Prepaid insuranceCost of goods soldFinished goods inventoryFactory payrollFactory overheadGoods in process inventorySalesAccounts receivable
	(Click to select)SalesFactory overheadCashFinished goods inventoryRaw materials inventoryAccounts receivableCost of goods soldFactory payroll
	(Click to select)SalesCashFinished goods inventoryAccounts receivableFactory payrollCost of goods soldRaw materials inventoryFactory overhead
i.	(Click to select)Accum. depreciation-factory buildingPrepaid insuranceCost of goods soldFactory overheadProperty taxes payableSalesAccum. Depreciation-factory equipmentGoods in process inventory
	(Click to select)Factory overheadGoods in process inventoryProperty taxes payableAccum. depreciation-factory buildingPrepaid insuranceSalesCost of goods soldAccum. depreciation-factory equipment
	(Click to select)Prepaid insuranceSalesAccum. depreciation-factory equipmentProperty taxes payableAccum. depreciation-factory buildingGoods in process inventoryFactory overheadCost of goods sold
	(Click to select)SalesProperty taxes payableGoods in process inventoryCost of goods soldFactory overheadPrepaid insuranceAccum. depreciation-factory buildingAccum. depreciation-factory equipment
	(Click to select)Cost of goods soldSalesProperty taxes payableAccum. depreciation-factory equipmentFactory overheadGoods in process inventoryAccum. depreciation-factory buildingPrepaid insurance
j.	(Click to select)Factory overheadAccounts receivableFinished goods inventoryCashFactory payrollGoods in process inventoryRaw materials inventorySales
	(Click to select)Factory overheadFinished goods inventoryAccounts receivableSalesGoods in process inventoryFactory payrollRaw materials inventoryCash

10.

Required information

4.	Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Goods in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold. (Omit the "$" sign in your response.)

Reports of Job Costs
Goods in Process Inventory
(Click to select)Job 136Job 139Job 138Job 137	$
(Click to select)Job 140Job 137Job 136Job 139Job 138
Balance	$
Finished Goods Inventory
(Click to select)Job 139Job 140Job 136Job 138Job 137	$
Balance	$
Cost of Goods Sold
(Click to select)Job 137Job 136Job 139Job 140	$
(Click to select)Job 136Job 137Job 140Job 139Job 138
Balance	$

Answer 1

Solution:

1) Preparing a Job Cost Sheet for each Job Worked on during the Month:

	Job No: 136	Job No: 137	Job No: 138	Job No: 139	Job No: 140
Materials	$49,000	$33,000	$20,200	$23,200	$7,400
Labor	$12,300	$10,700	$37,900	$39,400	$3,400
Overhead (200% of Labor)	$24,600	$21,400	$75,800	$78,800	$6,800
Total Cost	$85,900	$65,100	$133,900	$141,400	$17,600

2) Preparing the Journal Entries to record the Events and Transactions a through j:

Event	General Journal	Debit	Credit
a	Raw materials inventory	$240,000
	Accounts payable		$240,000
b	Factory Payroll	$128,700
	Cash		$128,700
c	Factory Overhead	$15,500
	Cash		$15,500
d	Goods in process inventory	$132,800
	Factory overhead	$20,000
	Raw materials inventory		$152,800
e	Goods in process inventory	$103,700
	Factory Overhead	$25,000
	Factory Payroll		$128,700
f	Goods in process inventory	$179,200
	Factory overhead ($12,300 + $37,900 + $39,400) * 200%		$179,200
g	Finished goods inventory ($85,900 + $133,900 + $141,400)	$361,200
	Goods in process inventory		$361,200
h (1)	Accounts receivable	$545,000
	Sales		$545,000
h (2)	Cost of goods sold  ($85,900 + $133,900)	$219,800
	Finished goods inventory		$219,800
i	Factory overhead	$154,000
	Accum. depreciation - Factory building		$70,000
	Accum. depreciation - Factory Equipment		$36,500
	Prepaid insurance		$11,000
	Property taxes payable		$36,500
j	Goods in process inventory ($10,700 + $3,400) * 200%	$28,200
	Factory overhead		$28,200

4) Preparing a Report showing the total cost of each job in process:

Report of Job Costs
Goods in Process Inventory
Job 137	$65,100
Job 140	$17,600
Balance	$82,700
Finished Goods Inventory
Job 139	$141,400
Balance	$141,400
Cost of Goods Sold
Job 136	$85,900
Job 138	$133,900
Balance	$219,800