Question

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $6,600, direct labor of $4,100, and applied overhead of $3,485. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on account) for $29,500, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July.

July Product Costs	Job 120			Job 121			Job 122			Total
Direct materials	$	1,900		$	6,200		$	2,900		$	11,000
Direct labor		3,400			4,800			2,700			10,900
Overhead applied		?			?			?			?

1. Prepare journal entries for the following in July.

Direct materials used in production.

Direct labor used in production.

Overhead applied.

The sale of Job 120.

Cost of goods sold for Job 120.

2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Prepare journal entries for the above transactions in July.

Answer 1

1.

CUSTOM CABINETRY
General journal for the month of July
Date	Account Title	Debit	Credit
July.31	Work-in-process	11000
	Raw material		11000
	(Raw material used in production)
July.31	Work-in-process	10900
	Wages Payable		10900
	(Direct labor used for production)
July.31	Work-in-process	9265
	Manufacturing overhead		9265
	(Manufacturing applied at 85% of direct labor)
July.31	Finished Goods	37455
	Work-in-process		37455
	(Cost of finished goods tranferred to finished goods )
July.31	Cost of goods sold	22375
	Finished Goods		22375
	(Cost of Job. 120 transferred to cost of goods sold on sale)
July.31	Accounts Receivable	29500
	Sales		29500
	(Sale of Job 120 recorded)

2.

Work-in-rpcoess
Date	Details	Debit	Credit	Blance
July.1	Beg.Bal.	14185		14185
July.31	Raw material	11000		25185
July.31	Direct labor	10900		36085
July.31	Overhead	9265		45350
July.31	Finished Goods		37455	7895
Finished Goods
Date	Details	Debit	Credit	Blance
July.31	Work-in-process	37455		37455
July.31	Cost of goods sold		22375	15080

Working:

	Job 120	Job 121	Job 120	Total
Beginning value
Raw material	6600			6600
Direct labor	4100			4100
Overhead	3485			3485
During the month
Raw material	1900	6200	2900	11000
Direct labor	3400	4800	2700	10900
Overhead	2890	4080	2295	9265
Total Cost	22375	15080	7895	45350
Status	FINISHED	FINISHED	IN PROCESS
	SOLD	UNSOLD