Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 30 Inventories May 31 Raw materials $33,000 $ 54,000 Work in process 9,400 18,200 Finished goods 53,000 33,400 Activities and information for May Raw materials purchases (paid with cash) 176,000 Factory payroll (paid with cash) 150,000 Factory overhead Indirect materials 7,000 Indirect labor 34,500 Other overhead costs 117,500 Sales (received in cash) 1,400,000 Predetermined overhead rate based on direct labor cost 559 1. Direct labor usage. 2. Indirect labor usage. 3. Total payroll paid in cash. Prepare journal entries for the above transactions for the month of May.

Answer 1

	Account title and explanation	Debit	Credit
1	Work in process inventory [$150,000 - $34,500]	$115,500
	Factory payroll		$115,500
	[To record direct labor usage]
2	Factory overhead	$34,500
	Factory payroll		$34,500
	[To record indirect labor usage]
3	Factory payroll	$150,000
	Cash		$150,000
	[To record payment of payroll]