Question

Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following.
Job Number Materials
Requisition Slips Labor
Time Tickets
429 $2,500 $1,900
430 3,500 3,000
431 4,400 $10,400 7,600 $12,500
General use 800 1,200
$11,200 $13,700

Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month.

Instructions
a. Prepare summary journal entries to record (i) the requisition slips, (ii) the time tickets, (iii) the assignment of manufacturing overhead to jobs, and (iv) the completion of Job No. 429.
b. Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets. (Use a T-account.)

Answer 1

Ans.

a)

No.	Date	Account Tiles and Explanation	Debit	Credit
1	31-May	Work in Process Inventory	$10,400
		Manufacturing Overhead	$800
		Raw Materials Inventory		$11,200
2	31-May	Work in Process Inventory	$12,500
		Manufacturing Overhead	$1,200
		Factory Labor		$13,700
3	31-May	Work in Process Inventory (12500*60%)	$7,500
		Manufacturing Overhead		$7,500
4	31-May	Finished Good Inventory	$7,540
		Work in Process Inventory (2000+2500+1900+1140)		$7,540

b)

Work in Process Inventory

Debit		Credit
Beginning balance	$3,500	Job-429 completed	$7,540
Direct materials	$10,400
Direct labor	$12,500
Overhead applied	$7,500
	$33,900		$7,540
Ending balance	$26,360

c)

The total of the job cost sheets is:

Job	Beginning balance	Direct materials	Direct labor	Overhead applied	Total cost to date
Job 430	$1,500.00	$3,500.00	$ 3,000.00	$1,800.00	$ 9,800.00
Job 431	$           -	$4,400.00	$ 7,600.00	$4,560.00	$16,560.00
Total	$1,500.00	$7,900.00	$10,600.00	$6,360.00	$26,360.00