Question

Custom Cabinetry has one job in process (Job 120) as of June 30, at that time, its job cost sheet reports direct materials of $8,400, direct labor of $4,100, and applied overhead of $3.485. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold on account for $22.000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July Job 120 Job 121 Job 122 Total July Product Costs Direct material Direct $2,900 $7,700 $3,300 $13.00 Labor 2,600 5,400 3,500 11,500 Overhead applied 1. Prepare joumal entries for the following in July a. Direct materials used in production b. Direct labor used in production c. Overhead applied d. The sale of Job 120 e. Cost of goods sold for Job 120 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.) Complete this question by entering your answers in the tabs below. Required Required Prepare journal entries for the above transactions in July, View transaction list Journal entry worksheet < 1 2 3 4 5 Record the entry to assign direct materials to job. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry View general journal Clear entry

Answer 1

Answer - (1) -

Journal Entries of the transactions of July -

Transaction	General Journal	Debit ($)	Credit ($)
a.	Work in process inventory Raw materials inventory (To record materials used in production) [ Amount given in question ]	13900 -	- 13900
b.	Work in process inventory Factory payroll payable (To record the cost of labor used in production) [ Amount given in question ]	11500 -	- 11500
c.	Work in process inventory Factory overhead (To record overhead cost applied to production) [ $11500 * 85% ]	9775 -	- 9775
d.	Accounts receivable Sales (To record the sale of Job 120) [ Amount given in question ]	22000 -	- 22000
e.	Cost of goods sold Finished goods inventory [($8400 + $4100 + $3485 + $2900 + $2600) + ($2600 * 85%)] = $23695 (To record the cost of Job 120 sold)	23695 -	- 23695

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Answer - (2) -

Calculation of July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts -

	Work in Process	Finished Goods
Job #	Job 122	Job 121
Direct materials	$3300 [Given]	$7700 [Given]
Direct labor	$3500 [Given]	$5400 [Given]
Overhead	$2975 [$3500*85%]	$4590 [$5400*85%]
Total cost	$9775	$17690