Question

Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company's inventory balances were as follows: Raw materials Work in process Finished goods $21, 500 $12, 200 $31, 100 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 37,100 machine-hours and incur $150,255 in manufacturing overhead cost. The following transactions were recorded for the year: a. Raw materials were purchased on account: $222,000. b. Raw materials were requisitioned for use in production: $201.000 (85% direct and 15% indirect). c. The following costs were incurred for employee services: Direct labour Indirect labour Sales comissions Administrative salaries $168, 800 $ 29, 200 $ 39, 300 $ 84, 400 d. Heat, power, and water costs were incurred in the factory: $46,950. e. Prepaid insurance expired during the year: $15,500 (80% relates to factory operations, and 20% relates to selling and administrative activities). f. Advertising costs were incurred, $55,500. g. Depreciation was recorded for the year: $66,600 (75% relates to factory operations, and 25% relates to selling and administrative activities). h. Manufacturing overhead cost was applied to production. The company recorded 42,200 machine-hours for the year. i. Goods that cost $507,500 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totalled $751,200 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $500,300.

Answer 1

1)	Journal Entries
	Events	Particulars			Debit	Credit
	a)	Raw Materials			$ 222,000.00
		To Accounts Payable				$ 222,000.00
	b)	WIP			$ 170,850.00
		Manu. OH			$   30,150.00
		To Raw Materials				$ 201,000.00
	c)	WIP			$ 168,800.00
		Manu. OH			$   29,200.00
		To Factory Payroll				$ 198,000.00
	d)	Manu. OH			$   46,950.00
		To Accounts Payable				$   46,950.00
	e)	Manu. OH			$   12,400.00
		Insurance Expense			$     3,100.00
		To Prepaid Insurance				$   15,500.00
	f)	Advertising Expense			$   55,500.00
		To Accounts Payable				$   55,500.00
	g)	Manu. OH			$   49,950.00
		Depreciation Expense			$   16,650.00
		To Accumulated Depreciation				$   66,600.00
	h)	WIP			$ 170,910.00
		To Manu. OH				$ 170,910.00
		($ 150255 x 42200/37100)
	i)	Finished Goods			$ 507,500.00
		To WIP				$ 507,500.00
	j)	Accounts Receivable			$ 751,200.00
		To Sales				$ 751,200.00
		Cost of Goods sold			$ 500,300.00
		To Finished Goods				$ 500,300.00

2)	Raw Materials					Manufacturing OH					Work in Process
	Beg. Bal.	$   21,500.00	b)	$ 201,000.00		b)	$   30,150.00	h)	$ 170,910.00		Beg. Bal.	$   12,200.00	i)	$ 507,500.00
	a)	$ 222,000.00	End. Bal.	$   42,500.00		c)	$   29,200.00				b)	$ 170,850.00	End. Bal	$   15,260.00
		$ 243,500.00		$ 243,500.00		d)	$   46,950.00				c)	$ 168,800.00
						e)	$   12,400.00				h)	$ 170,910.00
						g)	$   49,950.00
						End Bal.	$     2,260.00
	Cost of Goods Sold					Finished Goods
	j)	$ 500,300.00	End. Bal	$ 500,300.00		Beg. Bal.	$   31,100.00	j)	$ 500,300.00
						i)	$ 507,500.00	End. Bal.	$   38,300.00

3-a)	Actual OH incurred		$ 168,650.00
	Applied OH		$ 170,910.00
	Overapplied OH		$     2,260.00

3-b)	Journal Entry
	Particulars			Debit	Credit
	Manu. OH			$ 2,260.00
	To Cost of Goods sold				$ 2,260.00

4)	Income Statement
	Sales			$ 751,200.00
Less:	Cost of Goods sold			$ 500,300.00
	Gross Margin				$ 250,900.00
Less:	Expenses:
	Insurance Expense			$     3,100.00
	Advertising Expense			$   55,500.00
	Depreciation Expense			$   16,650.00	$   75,250.00
	Net Income				$ 175,650.00

Is this okay?