Question

More Info a. Purchased materials on account, $490,000 b. Requisitioned direct materials and used direct labor in construction Recorded the materials requisitioned. Direct Materials Direct Labor House 402 $ 51,000 $ 43,000 House 403 69,000 39,000 House 404 61,000 56,000 House 405 85,000 54,000 c. The company incurred total wages of $250,000. Use the data from Item b to assign the wages. Wages are not yet paid. d. Depreciation of construction equipment, $6,500 e. Other overhead costs incurred: Equipment rentals paid in cash, $30,000; Worker liability insurance expired, $9,000 f. Allocated overhead to jobs. g. Houses completed: 402, 404 h. House sold on account 404 for $260,000 Print Done

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Answer 1

1. Predetermined overhead allocation rate = Estimated Construction Overhead / Estimated Total Direct Labor Cost = $ 1,000,000 / $ 2,000,000 * 100 = 50 % of direct labor cost.

2.

Transaction / Event	Accounts	Debit	Credit
		$	$
a.	Direct Materials	490,000
	Accounts Payable		490,000
b.	Work in Process Inventory	266,000
	Direct Materials		266,000
c.	Work in Process Inventory	192,000
	Construction Overhead	58,000
	Construction Wages Payable		250,000
d.	Construction Overhead	6,500
	Accumulated Depreciation: Equipment		6,500
e.	Construction Overhead	39,000
	Prepaid Insurance		9,000
	Cash		30,000
f.	Work in Process Inventory	96,000
	Construction Overhead		96,000
g.	Finished Goods Inventory	260,500
	Work in Process Inventory		260,500
h.	Accounts Receivable	260,000
	Construction Revenue		260,000