Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $190,000 ($178,000 direct materials and $12,000 indirect materials). C. Accrued direct labor cost of $90,000 and indirect labor cost of $110,000. d. Depreciation recorded on factory equipment, $40,000. e. Other manufacturing overhead costs accrued during October, $70,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October. g. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000. in eo the LE LII LON alanc dICE II dCI dCCO tas

Answer 1

a) journal entries

S.no	particular	Debit ($)	credit ($)
1	RAW MATERIAL INVENTORY	210000
	Accounts payable		210000
2	work in process	178000
	Manufacturing overhead	12000
	RAW MATERIAL INVENTORY		190000
3	work in process	90000
	Manufacturing overhead	110000
	Salaries and wages payable		200000
4	manufacturing overhead	40000
	Accumulated depreciation		40000
5	manufacturing overhead	70000
	Accounts payable		70000
6	work in process (note below) 1	240000
	Manufacturing overhead		240000
7	finished goods	520000
	Work in process		520000
8	cost of goods sold	480000
	Finished goods		480000
9	accounts receivable	600000
	Sales (note below) 2		600000

note 1: pre determined overhead rate××machine hour's

   30000machine hrs× $8= $240000

NOTE 2: sales=cost of goods sold+25%

   = 480000+25%= 600000

T accounts of manufacturing overhead and work in process

   Manufacturing overhead

RAW MATERIAL INVENTORY	$12000	work in process	$240000
Salaries and wages payable	$110000
Accumulated depreciation	$40000
Accounts payable	$70000
Balance (overapplied)	$8000

  work in process

Beginning balance	$42000	finished goods	$520000
RAW MATERIAL INVENTORY	$178000
Salaries and wages payable	$90000
Manufacturing overhead	$240000
		Balance	$30000

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