Question

8. River Falls Manufacturing uses a normal cost system and had the following data available for 2018: Direct materials purchased on account Direct materials requisitioned Direct labor cost incurred $150,000 84,000 125,000 Factory overhead incurred Cost of goods completed Cost of goods sold 146,000 288,000 258,000 Beginning direct materials inventory Beginning WIP inventory Beginning finished goods inventory Overhead application rate, as a percent of direct-labor costs 25,000 69,000 51,000 120 percent Prepare the necessary journal entries for the above transactions. (28 points)

Answer 1

1]	Direct materials inventory	$      1,50,000
	Accounts payable		$       1,50,000
	[To record direct materials purchased on account]
2]	WIP inventory	$          84,000
	Direct materials inventory		$          84,000
	[To record direct materials requisitioned]
3]	WIP inventory	$      1,25,000
	Salaries and wages payable		$       1,25,000
	[To record direct labor cost incurred]
4]	Factory overhead	$      1,46,000
	Other payables		$       1,46,000
	[Factory overhead incurred]
5]	WIP inventory [84000*120%]	$      1,00,800
	Factory overhead		$       1,00,800
	[To record overhead applied]
5]	Finished goods inventory	$      2,88,000
	WIP inventory		$       2,88,000
	[Finished goods transferred]
6]	Cost of goods sold	$      2,58,000
	Finished goods inventory		$       2,58,000