Question

Cool Sun produces awnings and screens. Cool Sun uses job order costing. Prepare journal entries to reflect the following transactions

Aug. 4, 2015 Purchased fabric and aluminum to be used in the manufacturing process. The purchase price was $4,000, on account.

Aug. 6, 2015 Transferred 60% of the raw materials purchased on August 4 into production for Job No. 234. ($500 is indirect material).

Aug. 30, 2015 Labor costs for Job No. 234 for production workers include 150 hours at $20 per hour. Labor costs for general maintenance workers include 15 hours at $50 an hour. Aug. 31, 2015 Factory overhead is applied at 110% of the direct labor cost.

Aug. 31, 2015 Depreciation on the factory equipment is determined using the straight-line method. The equipment was purchased seven years ago for $60,000. It has a 10-year life and no salvage value.

Aug. 31, 2015 The company purchased a one-year property insurance policy for the factory and equipment for $4,800 on January 1. The policy premium was originally debited to Prepaid Insurance.

Aug. 31, 2015 Property Taxes on the factory are $3,600 for the year.

Aug. 31, 2015 Factory utilities are $1,000 for the month of August.

Aug. 31, 2015 Transferred Job No. 234 with total assigned costs to finished goods.

Aug. 31, 2015 Sold and delivered the completed Job No. 234 to a customer for a 200% markup over cost, on account.

Aug. 31, 2015 Close out the manufacturing overhead account.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Aug. 4, 2015	Raw materials inventory	4000
	Accounts payable		4000
	(To record purchase of materials on account)
Aug. 6, 2015	Work in process inventory	1900
	Manufacturing overhead	500
	Raw materials inventory (60% x $4000)		2400
	(To record materials used in production)
Aug. 30, 2015	Work in process inventory (150 x $20)	3000
	Manufacturing overhead (15 x $50)	750
	Cash/Wages payable		3750
	(To record labor costs)
Aug. 31, 2015	Work in process inventory	3300
	Manufacturing overhead (110% x $3000)		3300
	(To record factory overhead applied)
Aug. 31, 2015	Manufacturing overhead ($60000 x 1/120)	500
	Accumulated depreciation-factory equipment		500
	(To record depreciation on factory equipment)
Aug. 31, 2015	Manufacturing overhead ($4800 x 1/12)	400
	Prepaid insurance		400
	(To record factory insurance)
Aug. 31, 2015	Manufacturing overhead ($3600 x 1/12)	300
	Cash/Property taxes payable		300
	(To record property taxes on factory)
Aug. 31, 2015	Manufacturing overhead	1000
	Cash		1000
	(To record factory utilities)
Aug. 31, 2015	Finished goods inventory ($1900 + $3000 + $3300)	8200
	Work in process inventory		8200
	(To record job completed and transferred to finished goods)
Aug. 31, 2015	Accounts receivable	24600
	Sales revenue*		24600
	(To record job sold on account)
Aug. 31, 2015	Cost of goods sold	8200
	Finished goods inventory		8200
	(To record the cost of the goods sold)
Aug. 31, 2015	Cost of goods sold	150
	Manufacturing overhead**		150
	(To close out manufacturing overhead to cost of goods sold)

Working:

*Cost of job no. 234	8200
Markup @ 200%	16400
Sales price $	24600
**Manufacturing overhead incurred	3450
Manufacturing overhead applied	3300
Underapplied overhead $	150