Question

Watkins Machinery Company uses a normal job costing system. The company has the following partial trial balance information for March, the last month of its fiscal year: Materials inventory (x, $9,750; Y, $6,500; Indirect materials, $16, 250) Work-in-process inventory (this is Job 101) Finished goods inventory (this is Job 100) $ 32,500 16,800 28,000 These transactions relate to the month of March: a. Purchased direct materials and indirect materials with the following summary of receiving reports: Material x Material y Indirect materials Total $ 32,500 32,500 16,250 $ 81,250 b. Issued direct materials and indirect materials with this summary of requisitions: Job 101 $ 16,250 13,000 $ 29, 250 Material x Material y Subtotal Indirect materials Total Job 102 $ 9,750 3,000 $ 12,750 Total $ 26,000 16,000 $ 42,000 26,000 $ 68,000

Answer 1

Requirement 1 Journal Transaction Particulars Raw Materials Accounts Payable (Raw material purchased on account) (in $) Debit 81,250 (in $) Credit 81,250 42,000 26,000 Work in Process Manufacturing OH Raw Materials (Material used) 68,000 56,000 16,250 Work in Process (33600+22400) Manufacturing OH Factory Labor (Costs for employees services apportioned) 72,250 58,500 Manufacturing OH Utility costs Depreciation Insurance (Other manufacturing OH costs incurred) 1,625 48,750 8,125 97,500 Work in Process [(3900+2600)*15) Manufacturing OH (Manufacturing OH applied) 97,500 1,38,150 Finished Goods (Job 101) Work in Process (Cost of Goods completed) 1,38,150

1,66,150 Cost of Goods sold (28000+138150) Finished Goods (Cost of Goods sold) 1,66,150 1,99,380 Accounts Receivable (33600+165780) Sales (Sales made on account) 1,99,380 Note Job 100 28,000 $ Beginning Inventory Direct Materials Direct Labor Manufacturing OH applied Job 101 Job 102 16,800 29,250 $ 12,750 33,600 $ 22,400 58,500 $ 39,000 (3900*15) (2600*15) 1,38,150 $ 74,150 27,630 (138150*20%) 1,65,780 Total Cost of goods (+) Margin $ 28,000 $ $ 5,600 $ (28000*20%) $ 33,600 $ Sale values Requirement 2 The ending balance of Work-in-Progress account is cost of Job 102, i.e., $ 74,150.

Requirement 3 Indirect Material Indirect Labor Utility costs Depreciation Insurance Total Manufacturing OH incurred (-) Manufacturing OH applied [(3900+2600)*15] Under-Applied Manufacturing OH 26,000 16,250 1,625 48,750 8,125 1,00,750 -97,500 3,250 $ $ $ The manufacturing OH is under-applied by $3,250. Requirement 4 Journal Transaction Particulars Cost of Goods sold Manufacturing OH (Under-Applied Manufacturing OH adjusted) (in $) Debit 3,250 (in $) Credit 3,250