Question

Pine Valley Catering uses a job order cost system. The following data summarize the operations related to the month of October, the first month of operations:

Materials purchased for $10,000 in cash.

Material requisitioned and labor used:

Job Number	Materials	Direct Labor
100	$1,500	$4,000
101	400	1,800
102	1,000	2,100
103	200	400
General Factory use	1,400	1,300

Factory overhead cost incurred in cash, $1,050

Depreciation of machinery, $700

Factory overhead applied at a rate of 50% of direct labor costs

Jobs completed: Nos. 100, 101, and 102

Jobs 100, and 101, were billed to customers at $6,000 and $3,000 respectively.

Adjust the Cost of Goods Sold Account for the under-or-over applied overhead.

Please show in details how do you Journalize the above transactions.

Answer 1

		DR	CR
1	Inventory	10000
	Cash		10000
2	Work in Progress	3100
	Manufacturing Overhead	1400
	Inventory		4500
3	Work in Progress	8300
	Manufacturing Overhead	1300
	Cash		9600
4	Manufacturing Overhead	1050
	Cash		1050
5	Manufacturing Overhead	700
	Accumulated Depreciation		700
6	Work in Progress	4150
	Manufacturing Overhead		4150
	(50% *8300of Direct labor Cost)
7	Finished goods	14750
	Work in Progress		14750
8	Cost of good sold	300
	Manufacturing Overhead		300
	(Opverhead Under Applied)
9	Account receivable	9000
	Sales		9000
10	Cost of good sold	10600
	Finished goods		10600

Job Number	100	101	102	Total
Materials	$ 1,500.00	$     400.00	$ 1,000.00	$    2,900.00
Direct Labor	$ 4,000.00	$ 1,800.00	$ 2,100.00	$    7,900.00
Overhead	$ 2,000.00	$     900.00	$ 1,050.00	$    3,950.00
Cost of Finshed goods	$ 7,500.00	$ 3,100.00	$ 4,150.00	$ 14,750.00