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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries to record the transactions given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Journal entries
No	General journal				Debit	Credit
a.	Raw materials				210,000
	accounts payable					210,000
b.	Work in process inventory				178,000
	manufacturing overhead				12,000
	Raw materials					190,000
c.	Work in process inventory				90,000
	manufacturing overhead				110,000
	Wages payable					200,000
d.	Manufacturing overhead				40,000
	Accumulated depreciation					40,000
e.	Manufacturing overhead				70,000
	Accounts payable					70,000
f.	Work in process inventory				240000
	manufacturing overhead					240,000
	(30000*8)
g.	Finished goods				520,000
	Work in process inventory					520,000
h.	Cost of goods sold				480,000
	finished goods					480,000
	Accounts receivable				600000
	sales	(480,000*125%)				600,000
	Manufacturing overhead
b.	12,000	f.	240,000
c.	110,000
d.	40,000
e.	70,000
		End bal	8,000
	Work In process inventory
Beg bal	42,000	g.	520,000
b.	178,000
c.	90,000
f.	240,000
end bal	30,000