Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October a. Raw materials purchased on account. $210.000. b. Raw materials used in production, $191,000 ($152,800 direct materials and $38,200 indirect materials) Accrued direct labor cost of $48,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $105,000. e. Other manufacturing overhead costs accrued during October, $131,000. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,200 machine-hours were used in October 9 Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods h. Jobs that had cost $452,000 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 $35,000,

Answer 1

Part 1

Transaction	General journal	Debit	Credit
a.	Raw materials inventory	210,000
	Accounts payable		210,000
b.	Work in process	152,800
	Manufacturing overhead	38,200
	Raw materials inventory		191,000
c.	Work in process	48,000
	Manufacturing overhead	21,000
	Salaries and wages payable		69,000
d.	Manufacturing overhead	105,000
	Accumulated depreciation		105,000
e.	Manufacturing overhead	131,000
	Accounts payable		131,000
f.	Work in process (76200*7)	533,400
	Manufacturing overhead		533,400
g.	Finished goods	512,000
	Work in process		512,000
h(1).	Cost of goods sold	452,000
	Finished goods		452,000
h(2).	Accounts receivable (452,000)*140	632,800
	Sales		632,800

Part 2

Manufacturing overhead
Beg. Bal.		533400	f.
b.	38200
c.	21000
d.	105000
e.	131000
End. Bal.		238200

Work in process
Beg. Bal.	35000	512,000	g
b.	152800
c.	48000
f.	533400
End. Bal.	257200