Question

Doody Transport assembles prestige manufactured homes. Its job costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturing overhead allocated at a budgeted $18 per machine-hour in 2014.The following data (in millions) show operation costs for 2014

Materials Control, beginning balance, January 1, 2014 $13

Work-in-Process Control, beginning balance, January 1, 2014 $10

Finished Goods Control, beginning balance, January 1, 2014 . $16

Materials and supplies purchased on credit $159

Direct materials used $147

Indirect materials (supplies) issued to various production departments $10

Direct manufacturing labor $99

Indirect manufacturing labor incurred by various production departments $38

Depreciation on plant and manufacturing equipment $22

Miscellaneous manufacturing overhead incurred (ordinarily would be detailed as repairs, utilities, etc., with a corresponding credit to various liability accounts) $15

Manufacturing overhead allocated, 3,500,000 actual machine-hours ?

Cost of goods manufactured . $299

Revenues $405

Cost of goods sold $293

Requirements 2 and 3. Prepare journal entries. Number your entries. Explanations for each entry may be omitted. Post to T-accounts. What is the ending balance of Work-in-Process Control? Show the journal entry for disposing of under- or overallocated manufacturing overhead directly as a year-end writeoff to Cost of Goods Sold. Post all the entry to T-accounts.

Record the purchase of materials, $ 159

Record debits first, then credits. Exclude explanations from any journal entries.)

Journal Entry Accounts Debit Credit (In millions)

(1) Record the direct materials used, $ 147

(2) Record the indirect materials used, $ 10

(3) Record the cost of the direct and indirect manufacturing labor used in the production of $ 99and $ 38, respectively. (Combine the entries to record direct and indirect labor into one entry.) Journal Entry Accounts Debit Credit (In millions)

(4) Record the depreciation expense of $ 22 Journal Entry Accounts Debit Credit (In millions)

(5) Record the miscellaneous manufacturing overhead costs of $ 15. Journal Entry Accounts Debit Credit (In millions) (6) Now record the entry to allocate the manufacturing overhead. Journal Entry Accounts Debit Credit (In millions)

(7) Record the cost of goods manufactured of $ 299. Journal Entry Accounts Debit Credit (In millions)

(8) Record the revenues of $ 405. Journal Entry Accounts Debit Credit (In millions)

(9) Record the cost of goods sold of $ 293. Journal Entry Accounts Debit Credit (In millions)

(10) Dispose of the year-end under- or overallocated manufacturing overhead. Journal Entry Accounts Debit Credit (In millions)

(11) Now post entries (1) through (11) to the accounts below, then calculate the ending balance in each account. (For accounts with a $0 balance leave the balance line blank.)

.

Answer 1

Req 1. Journal Entries

ACCOUNTS TITLES AND EXPLANATIONS				DEBIT IN MILLION $	CREDIT IN MILLION $
Raw material Inventory Dr.				159
Accounts payable					159
(For raw material purchased)
Work in process Inventory Dr.				147
Manufacturing overheads Account Dr.				10
Raw material Inventory Account					157
(for raw material issued as direct and indirect material)
Wages Payable Dr.				137
Cash Account					137
(for wages incurred )
Work in Process Inventory Dr.				99
Manufacturing overheads Account Dr.				38
Wages payable					137
(for wages charged to work in process and overheads Account)
Manufacturing overheads Account Dr.				37
Accumulated depreciation					22
Cash Account					15
(For depreciation and other overheads expense incurred in cash)
Work in progress Inventory				63
Manufacaturing overheads					63
(for overheads absorbed)
Finished Goods inventory				299
Work in process inventory					299
(for goods completed)
cash Account Dr.				405
Sales revenue Account					405
(for goods sold)
Cost of goods sold Dr.				293
Finished goods Inventory					293
(for cost of goods sold)

Req2: T-Accounts

RAW MATERIAL INVENTORY
Balance		13	Work in Process		147
Cash		159	Manufacturing overhead		10
Balance		15
MANUFACTURING OVERHEADS
Raw material		10	Work in Process		63
Wages payable		38	Cost of goods sold		22
Cash		15
Accumulated dep		22
WORK IN PROCESS INVENTORY-
Balance		10	Finished Goods Inventory		299
Raw material Inv.		147
Wages Payable		99
Manufacturing Overheads		63
Balance		20
FINISHED GOODS INVENTORY
Balance		16	Cost of Goods sold		293
work in Process		299
Balance		22
COST OF GOODS SOLD
Finished Goods Inv		293
Manufacturing overheads		22
(under-applied overheads charged)
Ending Balance		315