Question

#11

Custom Cabinetry has one job in process (Job 120) as of June 30: at that time, its job cost sheet reports direct materials of $8.800, direct labor of $4,400, and applied overhead of $3.740. Custom Cabinetry applies overhead at the rate of 85% 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 Costs Job 120 Direct materials $1,8ee Direct labor 3,100 Overhead applied ? Job 121 $8,300 4,000 ? Job 122 Total $3,600 $13,700 3,100 1e, 2ee ? 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.)

Answer 1

	Job sheet			job 120	job121	job122	Total
	Beginning bal
	Direct materials			8,800			8,800
	Direct labor			4,400			4,400
	applied overhead			3,740			3,740
	Total beginning bal			16,940			16,940
	cost added during the year
	Direct materials			1,800	8,300	3,600	13,700
	Direct labor			3,100	4,000	3,100	10,200
	applied overhead			2635	3400	2635	8670
	total cost added during the year			7,535	15700	9335	32,570
	total cost of job			24,475	15700	9335	49,510
1)	Journal entries
	No.	General Journal				Debit	Credit
	a.	Work in process inventory				13,700
		Raw materials inventory					13,700
	b.	Work in process inventory				10,200
		factory wages payable					10,200
	c.	work in process inventory				8,670
		Manufacturing overhead					8,670
	d.	Account receivable				26,500
		Sales					26,500
	e.	Cost of goods sold				24,475
		Finished goods inventory					24,475
2)		Work in process inventory
	Beg bal	16,940	Finished	40,175
	a.	13,700	goods
	b.	10,200
	c.	8,670
	End bal	9,335
		Finished goods inventory
	Beg.bal	0	COGS	24,475
	WIP	40,175
	End bal	15,700
				wip	finished
	Job#			122	121
	Direct materials			3,600	8,300
	direct labor			3,100	4,000
	overhead			2635	3400
	total			9,335	15,700