Question

Exercise 3-2 Prepare T-Accounts [LO3-2, LO3-4) Jurvin Enterprises is a manufacturing company that had no beginning inventories. A subset of the transactions that it recorded during a recent month is shown below. a. $75,300 in raw materials were purchased for cash. b. $71,500 in raw materials were used in production. Of this amount, $65,200 was for direct materials and the remainder was for indirect materials. c. Total labor wages of $151,000 were incurred and paid. Of this amount, $134,100 was for direct labor and the remainder was for indirect labor. d. Additional manufacturing overhead costs of $126,500 were incurred and paid. e. Manufacturing overhead of $126,700 was applied to production using the company's predetermined overhead rate. f. All of the jobs in process at the end of the month were completed. g. All of the completed jobs were shipped to customers. h. Any underapplied or overapplied overhead for the period was closed to Cost of Goods Sold. Required: 1. Post the above transactions to T-accounts. 2. Determine the adjusted cost of goods sold for the period.

Answer 1

Solution 1:

Cash					Raw materials
Particulars	Debit	Credit	Particulars		Particulars	Debit	Credit	Particulars
Beg. Balance	$0				Beg. balance	$0
		$75,300	Raw materials purchases		Raw materials purchases	$75,300	$71,500	Material used
		$1,51,000	Labor Wages
		$1,26,500	Other Manufacturing overehad		End. balance	$3,800
End. Balance		$3,52,800
Work In Process					Finished Goods
Particulars	Debit	Credit	Particulars		Particulars	Debit	Credit	Particulars
Beg. Balance	$0				Beg. Balance	$0
Direct Materials	$65,200	$3,26,000	Completed Jobs		Completed Jobs	$3,26,000	$3,26,000	Cost of goods sold
Direct labor	$1,34,100
Manufacturing Overhead	$1,26,700				End. Balance	$0
End. Balance	$0
Manufacturing overhead					Cost of goods sold
Particulars	Debit	Credit	Particulars		Particulars	Debit	Credit	Particulars
Beg. Balance	$0				Beg. Balance	$0
Indirect Materials	$6,300	$1,26,700	Manufacturing Overhead applied		Finished goods	$3,26,000
Indirect labor	$16,900	$23,000	Cost of goods sold		Underapplied overhead	$23,000
Other Manufacturing overhead	$1,26,500
					End. Balance	$3,49,000
End. Balance	$0

Solution 2:

Adjusted Cost of goods sold = $349,000