Question

Chapter 15 Homework Custom Cabinetry has one job in process (Job 120) as of June 30, at that time, its job cost sheet reports direct materials of $8,100. direct labor of $3,700, and applied overhead of $2.960. Custom Cabinetry applies overhead at the rate of 80% of direct labor cost. During July, Job 120 is sold on account) for $26.500, 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 July Product Coc o 120 01.900 121 67.600 122 $3.900 Total $13.400 Direcs Labor 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 Prepare journal entries for the above transactions in July. View transaction list View journal entry worksheet No Transaction General Journal Work in process inventory Debit Credit 2 Work in process inventory 3 Work in process inventory d. No Transaction Recorded No Transaction Recorded

Answer 1

(1) -- Prepare journal entries for the following in July.

Answer -

Journal Entries

	Transaction	General journal	Debit ($)	Credit ($)
1.	a.	Work in Process Inventory [Refer working note - (1)] Raw materials inventory (To record direct materials used in production)	13400 -	- 13400
2.	b.	Work in Process Inventory [Refer working note - (1)] Wages Payable (To record direct labor used in production)	12300 -	- 12300
3.	c.	Work in Process Inventory [Refer working note - (1)] Factory overhead (To record overhead cost applied to production)	11070 -	- 11070
4.	d.	Accounts Receivable Sales Revenue [Given in question] (To record the sale of Job 120)	26500 -	- 26500
5.	e.	Cost of Goods Sold [Refer working note - (1)] Finished Goods Inventory (To record the cost of Job 120 sold)	24070 -	- 24070

# Working Note - (1) - Calculation of Cost of each Job -

	July Product Costs	Explanation	Job 120	Job 121	Job 122	Total
I.	Beginning Work in Process	$8100 + $3700 + $2960	$14760	-	-	$14760
II.	Direct materials	Given in question	$1900	$7600	$3900	$13400
III.	Direct labor	Given in question	$3900	$4900	$3500	$12300
IV.	Overhead applied	90% of Direct labor cost	$3510 [$3900*90%]	$4410 [$4900*90%]	$3150 [$3500*90%]	$11070
Total Cost		I + II + III + IV	$24070	$16910	$10550	$51530

.

(2) -- Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts.

Answer -

		Explanation	Work in Process	Finished Goods
	Job #	-	122	121
I.	Direct materials	Given in question	$3900	$7600
II.	Direct labor	Given in question	$3500	$4900
III.	Overhead	90% of Direct labor cost	$3150	$4410
Total Cost		I + II + III	$10550	$16910