Question

schmeltz industries organized in january and recorded the following transactions during its first month of operations

jan5-purchased materials on account for $800,00

jan9-used materials costing $450,000 on job no.1001

jan14-used materials costing $200,000 on job no.1002

jan18- used materials costing $100,000 on job no.1003

jan25- applied the following direct labor costs to jobs: no.1001, $3600; no.1002 ,$5400; and no.1003 , $1350 (direct labor workers earn $18 per hour)

jan27-applied manufacturing overhead to all jobs at a rate of $450 per direct labor hour

jan28- completed and transfered job no.1001 and job no.1002 to finished goods warehouse

jan29- sold job no.1001 on account for $725,000

jan31- recorded and paid actual January manufacturing overhead costs of $248,750 cash

jan31- closed the manufacturing overhead account directly to costs of goods sold

question a : prepare a journal entries for each of these transactions

question b : compute the balance of the costs of goods sold account at January 31

question c : determine the companys inventory balance at January 31

question d : was manufacturing overhead in january overpaid or underpaid explain?

Answer 1

Date Accounts title Debit Credit $ 800,000 5-Jan Materials inventory Accounts payable [to record the purchase of inventory on account ] 800,000 9-Jan Work in progress-1001 $ 450,000 Materials inventory (To record the cost of direct materials placed into production for job no.1001) S 450,000 14-Jan Work in progress-1002 $ 200,000 Materials inventory (To record the cost of direct materials placed into production for job no.1002) 200,000 18-Jan Work in progress-1003 $ 100,000 Materials inventory (To record the cost of direct materials placed into production for job no. 1003) 100,000 5,400 25-Jan Work in progress-1001 3,600 Work in progress-1002 Work in progress-1003 1,350 Direct labor (To record in the general ledger all direct labor costs charged to jobs during Jan.) 10,350

27-Jan Work in progress-1001 [ 3600/18 x $450 ] $ 90,000 Work in progress-1002 [5,400/18 x $450 ] $ 135,000 Work in progress-1003 (1,350 /18 x 450] $ 33,750 Manufacturing overhead $ 258,750 [To charge Work in Progress with overhead costs applied to jobs during the month of Jan] 884,000 28-Jan Finished goods inventory $ Work in progress-1001 (90,000 +3600 +450000] Work in progress-1002 [ to record the transfer of workin progress to finished goods] $ $ 543,600 340,400 $ 725,000 29-Jan Accounts receivable Sales [to record the sales ] $ 725,000 $ 543,600 29-Jan cost of goods sold Finished goods inventory [to record the cost of goods sold ] 543,600 $ 248,750 31-Jan Manufacturing overhead cash [to record the payment for manufacturing overhead ] $ 248,750 | $ 248,750 31-Jan cost of goods sold Manufacturing overhead $ 248,750

Requirement b: Cost of goods sold [543,600 + 248,750 ] $ 792,350 Requirement c: Materials inventory Workin progress inventory (100,000 +1,350 +33,750] Finished goods inventory $ 50,000 135,100 340,400 $ Requirement du Manufacturing overhead was overapplied There is a credit of $10,000 ( 258,750-248,750 ) in the Manufacturing Overheadas the overhead applied to the jobs exceeded the actual overhead costs