Question

PROBLEMS Problem 5.26 Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold During May, the following transactions were completed and reported by Jerico Company: a. Materials purchased on account, $60,100. b. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,800. c. Payroll for the month: direct labor, $75,000; indirect labor, $36,000; administrative, $28,000; sales, $19,000. d. Depreciation on factory plant and equipment, $10,400. e. Property taxes on the factory accrued during the month, $1,450. f. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200. g. Factory utilities, $5,500.- h. Advertising paid with cash, $7,900. i. Depreciation on office equipment, $800; on sales vehicles, $1,650. Legal fees incurred but not yet paid for preparation of lease agreements, $750. k. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month. 1. Cost of jobs completed during the month, $160,000. (continued)

Answer 1

Answer

Debit Credit Prepare journal entries to record the transactions given above. Transaction General Journal raw Material Accounts Payable raw materials purchased) 60,100 60,100 b l 50.000 8,800 Work in process Manufacturing Overhead Raw Material raw materlals Issued to production) 58.800 Factory wages Administrative wares Sales Wages Wages Payable 19.000 1,58,000 cz 75,000 36.000 lWork In Process Imanufacturine Overhead Factory wages (Salarles and wages Incurred) 111.000 d. ef&S 23.550 Manufacturing Overhead Cash Ir=10400+1450+5200+5500) 23,550 7.900 Advertisine expense Cash 7.900 2.450 Depreclatlon-office equipment & sales vehicles Accumulated Depreclatlon 2,450 J 750 Leeal Fee Legal fee payable 750 72.000 Work-In Process IManufacturine Overhead lioverhead applled 4000 hours x $18) 72.000 1.60.000 Finished Goods Work in process (transferred to the finished goods 1.50,000

Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) T-Accounts Beg Bal $ 58,800 Raw Materials Inventory $ 7,500 b $ 60,100 $ 8,800 End Balance Beg Bal $ 1,60,000 Work in Process Inventory 37,000 $ 50,000 $ 75,000 $ 72,000 Balance $ 74,000 b $ 72,000 Manufacturing Overhead 8,800k 36,000 23,550 d, e, f &g Balance $ 3,650 Beg Bal Finished Goods Inventory 50,000 $ 1,60,000 $ 2,10,000 $ Balance

Answwer 3 Schedule of Cost of goods manufactured Direct materials: Raw materials Inventory, Opening Add: Purchases of raw materials Raw materials available for use Deduct: Raw materials Inventory, Closing Less: Indirect Material Raw materials used in production Direct labor Manufacturing over head applied Total manufacturing costs Add: Work in process Inventory, Opening 7.500 60,100 67,600 8,800 8goal 1 50,000 75.000 72,000 1,97,000 37,000 2,34,000 74,000 $1,60,000 Deduct: Work in process Inventory, Ending Cost of goods manufactured

Answer 4 Over applied overhead 3,650 Debit Credit 3.650 Manufacturing Overhead cost of Goods Sold 3.650 Cost of Goods sold will decrease by 53,650