Question

Journal Entries, Job Costs

The following transactions occurred during the month of April for Olakala Company:

1. Purchased materials costing $3,000 on account.
2. Requisitioned materials totalling $1,700 for use in production: $500 for Job 443 and the remainder for Job 444.
3. Recorded 50 hours of direct labour on Job 443 and 100 hours on Job 444 for the month. Direct labourers are paid at the rate of $8 per hour.
4. Applied overhead using a plantwide rate of $7.50 per direct labour hour.
5. Incurred and paid in cash actual overhead for the month of $1,230.
6. Completed and transferred Job 443 to Finished Goods.
7. Sold on account Job 442, which had been completed and transferred to Finished Goods in March, for cost ($2,000) plus 25 percent.

Required:

1. Prepare journal entries for transactions (a) through (e).

a.	Raw Materials
	Accounts Payable
b.	Work in Process
	Raw Materials
c.	Work in Process
	Raw Materials
d.	Work in Process
	Overhead Control
e.	Overhead Control
	Cash

2. Prepare job-order cost sheets for Jobs 443 and 444.

Olakala Company
Job Order Cost Sheets
For the Month of January
	Job 443	Job 444
Direct materials	$	$
Direct labour
Applied overhead
Total	$	$

Prepare journal entries for transactions (f) and (g).

f.
g. Cost
Sale

3. Prepare a statement of cost of goods manufactured for April. Assume that the beginning balance in the Raw Materials account was $1,400 and that the beginning balance in the Work in Process account was zero. If the amount box does not require an entry, enter "0".

Olakala Company
Schedule of Cost of Goods Manufactured
For the Month Ended April 30
Direct materials:
	$
	$
		$
	$
		$
		$
		$

Answer 1

1.

a.	Raw Materials		3000
	Accounts Payable			3000
b.	Work in Process		1700
	Raw Materials			1700
c.	Work in Process		1200[150hours*8]
	Raw Materials			1200
d.	Work in Process		1125[150*7.5]
	Overhead Control			1125
e.	Overhead Control		1230
	Cash	1230

2

Olakala Company
Job Order Cost Sheets
For the Month of January
	Job 443	Job 444
Direct materials	$500	$1200[1700-500]
Direct labor	$400[50*8]	$800[100*8]
Applied overhead	$375[50*7.5]	$750[100*7.5]
Total	$1275	$2750

Prepare journal entries for transactions (f) and (g).

f.	finished goods	1275
	work in process		1275
g.	cost of goods sold	2000
	finished goods		2000
Sale	account receivable	2500
	sales revenue		2500

2000+25%=2500

4.schedule of cost of goods manufactured

Olakala Company
Schedule of Cost of Goods Manufactured
For the Month Ended April 30
Direct materials:
beginning raw material inventory	$1400
purchase of raw material	3000
Total raw material available	$4400
ending raw material	$2700
Raw material used		$1700
direct labor		1200
overhead applied	$1125
Total manufacturing cost		$4025
Add beginning work in process	0
Total		$4025
Less:
ending work in process (Job 444)		$2750
cost of goods manufactured [4025-2750]		$1275