Question

Exercise 3-5 Journal Entries and T-accounts [LO3-1, LO3-2] The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. . 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. H. 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. 9. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. 7. 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. Complete this question by entering your answers in the tabs below.

Answer 1

Ans:

Journal entry
Transaction	General Journal	Debit	Credit
a.	Raw materials	$ 210,000
	Accounts Payable		$ 210,000
	(Being raw materials purchased)
b.	Work in process	$ 178,000
	Manufacturing overhead	$ 12,000
	Raw materials		$ 190,000
	(Being raw materials used in production)
c.	Work in process	$ 90,000
	Manufacturing overhead	$ 110,000
	Salaries and wages payable		$ 200,000
	(Being direct and indirect labor cost accrued)
d.	Manufacturing overhead	$ 40,000
	Accumulated depreciation		$ 40,000
	(Being depreciation recorded on factory equipment)
e.	Manufacturing overhead	$ 70,000
	Accounts Payable		$ 70,000
	(Being other manufacturing overhead accrued)
f.	Work in process	$ 240,000
	Manufacturing overhead		$ 240,000
	(Being applied manufacturing overhead cost to production using predetermined rate)
g.	Finished Goods	$ 520,000
	Work in process		$ 520,000
	(Being goods transferred to finished Goods)
h. (1)	Cost of Goods Sold	$ 480,000
	Finished goods		$ 480,000
	(Being jobs shipped to customers)
h. (2)	Accounts Receivable(480,000*25%)	$ 600,000
	Sales		$ 600,000
	(Being goods sold )

2
Manufacturing overhead
b.	$ 12,000	f	240,000
c.	$ 110,000
d.	$ 40,000
e.	$ 70,000
End Bal.		$ 8,000
Work in process
Beg. Bal.	$ 42,000
b.	$ 178,000	g	520,000
c.	$ 90,000
f.	$ 240,000
End. Bal.	$ 30,000