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, $7,600 of indirect materials and $12,100 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	$10,600	Direct materials	$21,900
Direct labor	8,300	Direct labor	15,000
Factory overhead	6,557	Factory overhead	11,850
Total	$25,457	Total	$48,750

Job 303		Job 304
Direct materials	$23,200	Direct materials	$15,500
Direct labor	19,000	Direct labor	11,100
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.

CHART OF ACCOUNTSOld School Publishing Inc.General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
132	Work in Process
133	Factory Overhead
134	Finished Goods
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
181	Land
191	Factory
192	Accumulated Depreciation-Factory

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Wages Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
531	Selling Expenses
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
540	Administrative Expenses
560	Depreciation Expense-Factory
590	Miscellaneous Expense
710	Interest Expense

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

Transaction	General Journal	Debit	Credit
a.	Work in process ($10600 + $21900 + $23200 + $15500)	71200
	Factory overhead	7600
	Materials		78800
	(To record direct and indirect materials used)
b.	Work in process ($8300 + $15000 + $19000 + $11100)	53400
	Factory overhead	12100
	Wages expense		65500
	(To record direct and indirect labor used)
c.	Work in Process (6557 + 11850 + 15010 + 8769)	42186
	Factory overhead		42186
	(To record factory overhead applied)
d.	Finished Goods (25457 + 48750)	74207
	Work in Process		74207
	(To record completion of jobs 301 and 302)

Factory overhead rate:

Job 301: $6557/$8300 = 79% of direct labor cost

Job 302: $11850/$15000 = 79% of direct labor cost

Factory overhead applied:

Job 303 = 79% x $19000 = $15010

Job 304 = 79% x $11100 = $8769