Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October:

Raw materials purchased on account, $211,000.

Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials).

Accrued direct labor cost of $48,000 and indirect labor cost of $21,000.

Depreciation recorded on factory equipment, $105,000.

Other manufacturing overhead costs accrued during October, $131,000.

The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,300 machine-hours were used in October.

Jobs costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

Jobs that had cost $450,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 22% above cost.

Required:

1. Prepare journal entries to record the transactions given above.

2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.

Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.

Required 2

	Manufacturing Overhead Work in Process Beg. Bal. End. Bal. End. Bal.

Answer 1

Work in progress inventory
Beg. Bal	36000	Finished goods	511000
Direct material	151200
Direct labor	48000
Manufacturing overheads	381500
	616700		511000
End Bal	105700
Manufacturing overheads
Actual overheads	131000	Work in progress	381500	(76300*5)
Depreciation	105000
Material	37800
Labor	21000
	294800		381500
End balance			86700

a	Raw material inventory	211000
	Accounts payable		211000
b	Work in progress inventory	151200
	Manufaturing overheads	37800
	Raw material inventory		189000
c	Work in progress inventory	48000
	Manufaturing overheads	21000
	Wages payable		69000
d	Manufacturing overheads	105000
	Accumulated depreciation- Factory equipment		105000
e	Manufacturing overheads	131000
	Accounts payable		131000
f	Work in progress inventory	381500	(76300*5)
	Manufacturing overheads		381500
g	Finished goods inventory	511000
	Work in progress inventory		511000
h	Accounts receivable	549000
	Sales revenue		549000
	Cost of goods sold	450000
	Finished goods inventory		450000