Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October a. Raw materials purchased on account, $209,000 b. Raw materials used in production, $191,000 ($152.800 direct materials and $38,200 indirect materials) c. Accrued direct labor cost of $48,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment. $104,000. e. Other manufacturing overhead costs accrued during October, $130,000 1. The company applies manufacturing overhead cost to production using a predetermined rate of $6 per machine-hour. A total of 76,000 machine-hours were used in October g. Jobs costing $514,000 according to their job cost sheets were completed during October and transferred to Finished Goods h. Jobs that had cost $448,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 40% 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 $36.000

Answer 1

Journal entry

No	General journal	Debit	Credit
1	raw material	209000
	Account payable		209000
2	Work in process	152800
	Manufacturing overhead	38200
	Raw material		191000
3	Work in process	48000
	Manufacturing overhead	21000
	Wages payable		69000
4	Manufacturing overhead	104000
	Accumulated depreciation-equipment		104000
5	Manufacturing overhead	130000
	Account payable		130000
6	Work in process (76000*6)	456000
	Manufacturing overhead		456000
7	Finished goods	514000
	Work in process		514000
8	Cost of goods sold	448000
	Finished goods		448000
9	Account receivable (448000*1.4)	627200
	Sales revenue		627200

T account

Work in process					Manufacturing overhead
Beg Bal	36000	Finished goods	514000		Accumulated depreciation-Equipment	104000	Work in process	456000
Direct material	152800				Account payable	130000
Direct labor	48000
Manufacturing overhead	456000
End bal	178800						Balance	222000