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Journal Entries, T-Accounts Ehrling Brothers Company makes jobs to customer order. During the month of July,...

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 $

Solutions

Expert Solution

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

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