Question

Exercise 15-5 Manufacturing cost flows LO P1, P2, P3 Custom Cabinetry has one job in process (Job 120) as of June 30, at that time, its job cost sheet reports direct materials of $8,300, direct labor of $3,900, and applied overhead of $3,510. Custom Cabinetry applies overhead at the rate of 90 % 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 stll in process at the end of the month. Custom Cabinetry incurs the following costs during July July Product Costs Direct materials Direct labor Job 121 $7,100 4,100 Job 120 Job 122 $4,000 3,500 Total $12,300 10,000 $1,200 2,400 Overhead applied 1. Prepare journal 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 general ledger 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 1 Required 2

Answer 1

1 Prepare journal entries as follows: А В С General Journal Work-in process inventory Raw material inventory Date Debit Credit 2 12,300 $ 12,300 3 4 5 Date General Journal Debit Credit Work-in process inventory Wages Payable $ 10,000 6 b 7 $10,000 8 Credit 9 Date General Journal Debit Work-in process inventory (10000*90%) Factory overhead (10000*90%) 9,000 10 9,000 11 12 Debit Credit 13 Date General Journal Sales (revenue) $ 22,000 d 14 $ 22,000 15 accounts Receivable 16 17 Date General Journal Debit Credit Cost of goods sold (1200+2400+(2400*90%) 5.760 18 e Finished Goods 19 5,760

2. Calculate work in process and finished goods balance as follows А В Calculation of WIP (Job 122) 1 2 Direct materials cost 3 Direct Labor cost 4,000 3,500 4 Overheads cost (3500*90%) 5 Amount of work in process inventory $ 3.150 S 10,650 6 Calculation of WIP (Job 121) 7 8 Direct materials cost $ 7,100 Direct Labor cost 9 $ 4,100 10 Overheads cost (4100*90%) 11 Amount of finished goods inventory 3.690 14,890