Question

Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $7,500 of indirect materials and $11,800 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

Job 301		Job 302
Direct materials	$10,500	Direct materials	$21,600
Direct labor	7,200	Direct labor	15,600
Factory overhead	4,752	Factory overhead	10,296
Total	$22,452	Total	$47,496

Job 303		Job 304
Direct materials	$23,800	Direct materials	$15,900
Direct labor	19,100	Direct labor	14,000
Factory overhead	—	Factory overhead	—

Required:

Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles. a. Direct and indirect materials used. b. Direct and indirect labor used. c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost). d. Completion of Jobs 301 and 302.

Answer 1

General Journal for the month of January

Date	Accounts Title	Debit	Credit
A.	Journal Entries for Direct and Indirect Material used
	Work in process- Job 301	10,500
	Work in process- Job 302	21,600
	Work in process- Job 303	23,800
	Work in process- Job 304	15,900
	Factory Overhead	7,500
	Material Inventory		79,300
	( To record direct material and indirect material used in various jobs)
B.	Journal entries for Direct and Indirect Labor used
	Work in process- Job 301	7,200
	Work in process- Job 302	15,600
	Work in process- Job 303	19,100
	Work in process- Job 304	14,000
	Factory Overhead	11,800
	Wages Payable		67,700
	(To record direct labor and indirect labor)
C.	Journal entries for Factory overhead applied to all four jobs
	Work in process- Job 301	2,520
	Work in process- Job 302	5,460
	Work in process- Job 303	6,685
	Work in process- Job 304	4,900
	Factory Overheads		19,565
	(To record Factory Overhead @0.35 per direct labor cost)1
D.	Journal Entries for Completion of Job 301 and Job 302
	Finished Goods Inventory	62,860
	Work in process- Job 3012		20,200
	Work in process- Job 3023		42,660
	(To record finished goods of Job 301 and Job 302)

Working Notes :

1) Factory Overhead Allocation rate = Total Factory Overhead/Total Direct Labor Cost

= $7,500 + $11,800/($ 7,200 + $15,600 + $19,100+ $14,000)

= $ 19,300 /$55,900

= $0.35 per direct labor dollar cost

Factory overhead applied to all jobs:

Direct labor dollar cost of the job * Factory overhead allocation rate

Job 301 = $7,200 * $0.35 = $2,520

Job 302 = $15,600 * $0.35 = $5,460

Job 303 = $19,100 * $0.35 = $6,685

Job 304 = $14,000 * $0.35 = $4,900

2) Finished Goods value in Job 301 = Material Used + Labor used + Factory Overhead

= $ 10,500+ $7,200 + $2,520 = $20,220

3) Finished Goods value in Job 302 = Material Used + Labor used + Factory Overhead

= $ 21,600 + $15,600 + $ 5,460 = $42,660