Question

Starbird Manufacturing makes accessories for kitchens and home offices. Their Work-in-Process Inventory account had a debit balance of $32,500 on February 1. Also on February 1, Starbird's job cost sheets reported these amounts: Geller $ 7,300 Direct materials Direct labor Manufacturing overhead Totals Customer Job Thomas $ 4,100 3,600 4,400 $ 12,100 5,500 Easton $ 400 250 450 $ 1,100 6,500 $ 19,300 During the month of February, Starbird purchased $13,000 of raw materials on account, and on February 29 they paid all of their employees' wages for hours worked in February. They also incurred miscellaneous overhead costs of (meaning they received the bills for) $8,400 on account. Their February materials requisition slips and employee time tickets showed: Customer / Job Thomas Macintosh Easton Geller Total direct Total indirect Materials Requisition Slips $ 900 2,200 500 3,500 7,100 1.750 $ 8,850 Time Tickets $ 1,100 1,400 750 2.800 6550 1.400 $ 7,450 Starbird applied overhead to each job at a rate of 125% of direct labor cost. The jobs for Geller and Thomas were completed in February. REQUIRED: 1. Prepare February journal entries for (a) the purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (b) the assignment of direct materials, direct labor and overhead to production; and (c) the completion of jobs. 2. Create a T-account for Work-In-Process Inventory, and show its February 1 balance, each February entry, and its February 29 balance. 3. Show your reconciliation of the February 29 Work-In-Process Inventory balance with the costs of the unfinished jobs.

Answer 1

Account Title & explanation Debit Credit 11 1 Raw Material inventory 12 13,000 Accounts Payable (To record Purchase of raw material) 13 13,000 14 15 Factory labor 16 7,450 Cash 7,450 17 (To record factory labor Costs incurred) 18 19 Manufacturing Overhead 20 8,400 Accounts Payable 8,400 21 ( to record manufacturing overhead costs incurred) 22 23 2 Work in Process Inventory 24 7,100 Manufacturing Overhead 25 1,750 Raw Material inventory 8,850 26 |(To record assignment of direct material) 27 28 Work in Process Inventory 29 6,050 Manufacturing Overhead Factory Labor |(To record assignment of factory labor) 30 1,400 7,450 31 32

Work in Process Inventory (6050*1.25) 34 7,563 Manufacturing Overhead 35 7,563 |(To record assignment of manufacturing Overhead) 36 37 3 Finished Goods Inventory 44,575 38 Work in Process Inventory 39 44,575 ( to record completion of Jobs) 40 Direct Material Manufacturing Ovrheads Direct Labor Total 42 Geller (7300 + 3500) 10,000 43 10,800 8,300 29,100 Thomas (4100 + 900) 44 15,475 5,000 4,700 5,775 Total 15,800 45 13,000 15,775 44,575 46 47 48 Post the entries to Work in Process Inventory. Work In Process Inventory 49 1-Feb 50 32,500 44,575 51 7,100 52 6,050 7,563 53 29-Feb 54 8,638

56 Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs 57 Easton(1100 +500+750+750*1.25) 3288 58 Macintosh(2200+1400+1400*1.25) Cost of Unfinished jobs 5350 59 60 8638 Work In Process Inventory 61 8638 62 63