Question

Journal Entries, T-Accounts

Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred:

1. Materials were purchased on account for $45,620.
2. Materials totaling $40,980 were requisitioned for use in producing various jobs.
3. Direct labor payroll for the month was $19,200 with an average wage of $12 per hour.
4. Actual overhead of $8,860 was incurred and paid in cash.
5. Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour.
6. Completed jobs costing $58,000 were transferred to Finished Goods.
7. Jobs costing $58,000 were sold on account for $ 73,750. Make the entry to record the revenue from the sale first, followed by the entry to record the cost of the jobs.

Beginning balances as of July 1 were:

Materials Inventory	$1,200
Work-in-Process Inventory	3,400
Finished Goods Inventory	2,640

Required:

1. Prepare the journal entries for the preceding events.

a.
b.
c.
d.
e.
f.
g (1).
g (2).

2. Calculate the ending balances of:

a. Materials Inventory	$
b. Work-in-Process Inventory	$
c. Overhead Control	$
d. Finished Goods Inventory	$

Answer 1

Answer
1
	Account Title	Debit	Credit
a.	Materials inventory	$      45,620
	Accounts payable		$          45,620
b.	Work-in-process inventory	$      40,980
	Materials inventory		$          40,980
c.	Work-in-process inventory	$      19,200
	Wages payable		$          19,200
d.	Overhead control	$        8,860
	Cash		$            8,860
e.	Work-in-process inventory	$        8,640
	Overhead control ($19200/12*5.4)		$            8,640
f.	Finished goods inventory	$      58,000
	Work-in-process inventory		$          58,000
g(1).	Accounts receivable	$      73,750
	Sales revenue		$          73,750
g(2).	Cost of goods sold	$      58,000
	Finished goods inventory		$          58,000

2

a. Materials inventory = $1200 + $45620 - $40980 = $5,840

b. Work-in-process inventory = $3400 + $40980 + $19200 + $8640 - $58000 = $14220

c. Overhead control = $8860 - $8640 = $220

d. Finished goods inventory = $2640 + $58000 - $58000 = $2640