Question

I need help with this homework exercise for Accounting II. Any help is appreciated! thank you :)

Starbird Manufacturing makes accessories for kitchens and home offices. Their Work-In-Process Inventory account had a debit balance of $32,500 on February 1. Also on February 1, Starbird’s job cost sheets reported these amounts:

Geller $ 7,300 5,500 6,500 $ 19,300 Direct materials Direct labor Manufacturing overhead Totals Customer / Job Thomas $ 4,100 3,600 4,400 $ 12,100 Easton $ 400 250 450 $ 1,100

During the month of February, Starbird purchased $13,000 of raw materials on account, and on February 29 they paid all of their employees’ wages for hours worked in February. They also incurred miscellaneous overhead costs of (meaning they received the bills for) $8,400 on account.

Their February materials requisition slips and employee time tickets showed:

Starbird applied overhead to each job at a rate of 125% of direct labor cost. The jobs for Geller and Thomas were completed in February.

REQUIRED:

1. Prepare February journal entries for (a) the purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (b) the assignment of direct materials, direct labor and overhead to production; and (c) the completion of jobs.

2. Create a T-account for Work-In-Process Inventory, and show its February 1 balance, each February entry, and its February 29 balance.

3. Show your reconciliation of the February 29 Work-In-Process Inventory balance with the costs of the unfinished jobs.

Answer 1

Sl No.	Accounts and explanation					Debit	Credit
(a)	Raw materials					13000
	Accounts payable						13000
	(Purchase of raw materials)
	Salaries and wages expense					7450
	Salaries and wages payable						7450
	(Labor costs incurred)
	Manufacturing overhead					8400
	Accounts payable						8400
	(Miscellaneous costs incurred)
(b)	Work in process					7100
	Manufacturing overhead					1750
	Raw materials						8850
	(Assignment of direct materials)
	Work in process					6050
	Manufacturing overhead					1400
	Salaries and wages expense						7450
	(Assignment of direct labor)
	Work in process			(Direct labor*125%)		7562.5
	Manufacturing overhead			(6050*125%)			7562.5
	(Assignment of manufacturing overhead)
c)	Finished goods				(Note:1)	44575
	Work in process						44575
	(Completion of jobs)
Note:1
Jobs completed in February-Geller and Thomas
					Geller	Thomas	Total
Beginning balance					19300	12100
Direct materials					3500	900
Direct labor					2800	1100
Manufacturing overhead applied					3500	1375
(Direct labor*125%)					(2800*125%)	(1100*125%)
Total					29100	15475	44575
		Work in process
Date				Debit	Date				Credit
Feb 1.	Beg.	(19300+12100+1100)		32500	Feb.	Tr. To Finished goods			44575
	Direct materials			7100
	Direct labor			6050
	Manufacturing overhead applied			7562.5
				53212.5					44575
Feb 29.	End.			8637.5
Cost of unfinished jobs=Cost of Macintosh and Easton:
					Macintosh	Easton	Total
Beginning balance					0	1100
Direct materials					2200	500
Direct labor					1400	750
Manufacturing overhead applied					1750	937.5
(Direct labor*125%)					(1400*125%)	(750*125%)
Total					5350	3287.5	8637.5
Feb 29 WIP balance=Cost of unfinished jobs=$ 8637.50