Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October:

1. Raw materials purchased on account, $209,000.
2. Raw materials used in production, $192,000 ($153,600 direct materials and $38,400 indirect materials).
3. Accrued direct labor cost of $49,000 and indirect labor cost of $21,000.
4. Depreciation recorded on factory equipment, $105,000.
5. Other manufacturing overhead costs accrued during October, $129,000.
6. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 76,300 machine-hours were used in October.
7. Jobs costing $510,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
8. Jobs that had cost $447,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 36% 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 $33,000.

Answer 1

	General Journal	Debit	Cedit
1	Raw material inventory	$209,000
	Accounts payable		$209,000
2	Work in process inventory	$153,600
	Manufacturing overhead	38,400
	Raw material inventory		$192,000
3	Work in process inventory	$49,000
	Manufacturing overhead	21,000
	Wages payable		$70,000
4	Manufacturing overhead	$105,000
	Accumulated depreciation-factory equipment		$105,000
5	Manufacturing overhead	$129,000
	Other overhead costs		$129,000
6	Work in process inventory (76,300*$8)	$610,400
	Manufacturing overhead		$610,400
7	Finished goods inventory	$510,000
	Work in process inventory		$510,000
8	Accounts receivable ($447,000+36%)	$607,920
	Sales		$607,920
	Cost of goods sold	$447,000
	Finished goods inventory		$447,000

2.

Manufacturing overhead				Work in process
Beg.Bal.	$0			Beg.Bal.	$33,000
2	38,400	$610,400	6	2	153,600	$510,000	7
3	21,000			3	49,000
4	105,000			6	610,400
5	129,000
End.Bal.	$317,000			End.Bal.	$336,000