Question

Journal Entries, T-Accounts

Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred:

1. Materials were purchased on account for $45,620.
2. Materials totaling $40,880 were requisitioned for use in producing various jobs.
3. Direct labor payroll for the month was $22,400 with an average wage of $14 per hour.
4. Actual overhead of $8,860 was incurred and paid in cash.
5. Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour.
6. Completed jobs costing $59,000 were transferred to Finished Goods.
7. Jobs costing $58,000 were sold on account for $ 73,750. Make the entry to record the revenue from the sale first, followed by the entry to record the cost of the jobs.

Journal Entries, T-Accounts Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred: a. Materials were purchased on account for $45,620. b. Materials totaling $40,880 were requisitioned for use in producing various jobs. c. Direct labor payroll for the month was $22,400 with an average wage of $14 per hour. d. Actual overhead of $8,860 was incurred and paid in cash. e. Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour. f. Completed jobs costing $59,000 were transferred to Finished Goods. g. Jobs costing $58,000 were sold on account for $ 73,750. Make the entry to record the revenue from the sale first, followed by the entry to record the cost of the jobs. Beginning balances as of July 1 were: Materials Inventory $1,100 Work-in-Process Inventory 3,400 Finished Goods Inventory 2,620 Required: 1. Prepare the journal entries for the preceding events. a. Materials 45,620 Accounts Payable 45,620 Work in Process 40,880 Materiale

Answer 1

Actual direct labor hours = Direct labor cost / Per hour rate

Actual direct labor hours = $22,400 / $14 = 1,600 hours

Applied overhead = 1,600*$5.40 = $8,640

e	Work in process	$8,640
	Overhead control		$8,640

2.

Material Inventory				Work in Process Inventory
Beg.Bal.	$1,100			Beg.Bal.	$3,400
a	45,620	$40,880	b	b	40,880	$59,000	f
End.Bal.	$5,840			c	22,400
				e	8,640
				End.Bal.	$16,320
Overhead Control				Finished Goods Inventory
Beg.Bal.	$0			Beg.Bal.	$2,620
d	8,860	$8,640	e	f	59,000	$58,000	g
End.Bal.	$220			End.Bal.	$3,620

Ending Balances:

Material inventory = $5,840

Work in process inventory = $16,320

Overhead control = $220 (Underapplied)

Finished goods inventory = $3,620