Question

E15.2 Prepare journal entries for manufacturing costs. (LO 1, 2, 3, 4), AP Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following. Job Number Materials Requisition Slips Labor Time Tickets 429 $1,900 $2,500 3,500 3,000 430 431 4,400 $10,400 1,600 $12,500 1,200 General use 800 $11,200 $13,700 Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month. Instructions (a) Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429. (b) Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets. (Use a T-account.)

Answer 1

(1)

Particulars	Debit	Credit
Job.429 WIP a/c Dr Job.430 WIP a/c Dr Job.431 WIP a/c Dr WIP a/c Dr To Stores a/c (Being materials used for production)	$2500 $3500 $4400 $800	$11200

Particulars	Debit	Credit
Job No.429 WIP a/c Dr Job No.430 a/c Dr Job No.431 a/c Dr WIP a/c Dr To Factory Overheads a/c (Being factory overhead recognized)	$1140 $1800 $4560 $720	$8220

Particulars	Debit	Credit
Job.429 WIP a/c Dr Job.430 WIP a/c Dr Job.431 WIP a/c Dr WIP a/c Dr To Lobor cost a/c (Being labor used for production	$1900 $3000 $7600 $1200	$13900

Job.No.429 Finished goods a/c Dr $7540

To Job.No.429 WIPa/c $7540

General Ledger Control a/c

Dr	To balance c/d	36820	By balance b/d	3500	Cr
			By Stores a/c	11200
			By Labor Cost a/c	13900
			By Factory Overheads a/c	8220
		36820		36820