Question

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Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows.

1. Purchased raw materials on credit, $200,000.
2. Materials requisitions record use of the following materials for the month.

Job 136	$	48,500
Job 137		33,500
Job 138		19,400
Job 139		23,400
Job 140		7,200
Total direct materials		132,000
Indirect materials		19,500
Total materials used	$	151,500

3. Paid $15,750 cash to a computer consultant to reprogram factory equipment.
4. Time tickets record use of the following labor for the month. These wages were paid in cash.

Job 136	$	12,100
Job 137		10,600
Job 138		37,700
Job 139		39,000
Job 140		3,400
Total direct labor		102,800
Indirect labor		25,500
Total	$	128,300

5. Applied overhead to Jobs 136, 138, and 139.
6. Transferred Jobs 136, 138, and 139 to Finished Goods.
7. Sold Jobs 136 and 138 on credit at a total price of $530,000.
8. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building	$	69,500
Depreciation of factory equipment		37,000
Expired factory insurance		11,000
Accrued property taxes payable		36,500

9. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

3. Post the journal entries for the transactions to the following T-accounts, each of which started the month with a zero balance.

Answer 1

		job 136	job 137	job138	job139	job140	total
Materials		48,500	33,500	19,400	23,400	7,200	132,000
labor		12,100	10,600	37,700	39,000	3,400	102,800
overhead		24,200	21200	75400	78000	6800	205,600
total		84,800	65,300	132,500	140,400	17,400	440,400
2)	TR	General Journal				Debit	Credit
	a)	Raw materials inventory				200,000
		Accounts payable					200,000
	b)	Work in process inventory				132,000
		Factory overhead				19,500
		Raw materials inventoy					151,500
	c)	Factory overhead				15,750
		cash					15,750
	d)	Work in process inventory				102,800
		Factory overhead				25,500
		Cash					128,300
	e)	Work in process overhead				177,600
		Factory overhead					177,600
	f)	finished goods inventory				357,700
		Work in process inventory					357,700
	g)	Accounts receivable				530,000
		Sales					530,000
		cost of goods sold				217,300
		finished goods inventory					217,300
	h)	Factory overhead				154,000
		Accumulated depreciation-factory building					69,500
		Accumulated depreciation-factory equipment					37,000
		prepaid insurance					11,000
		property taxes payable					36,500
	i)	work in process inventory				28,000
		Factory overhead					28,000
	T- Accounts
Raw materials inventory					Work in process inventory
a.	200,000				b.	132,000
		151,500	b.		d.	102,800
					e.	177,600
end bal	48,500						357,700	f.
					i.	28000
					bal	82,700
Factory overhead					finished goods inventory
b.	19,500				f.	357,700
c.	15,750						217,300	g.
d.	25,500				bal	140,400
		177,600	e.
h.	154,000
		28,000	i
bal	9,150
cost of goods sold
g.	217,300
end bal	217,300
Report of Job costs
Work in process inventory
job 137			65,300
job 140			17,400
Balance			82,700
finished goods inventory
job 139			140,400
Balance			140,400
cost of goods sold
job 136			84,800
job 138			132,500
balance			217,300