Question

P3-4A. Job Cost Journal Entries Prior to the beginning of 2019, Lowe Company estimated that it would incur $176, 000 of manufacturing overhead cost during 2019, using 16,000 direct labor hours to produce the desired volume of goods. On January 1, 2019 beginning balances of Materials Inventory, Work-in-Process Inventory, and Finished Goods Inventory were $28,000, $-0-, and $43,000, respectively.

Required

Prepare general journal entries to record the following for 2019:

1. Purchased materials on account, $39,000
2. Of the total dollar value of materials used, $31,000 represented direct materials and $11,000 indirect materials.
3. Determined total factory labor, $135,000 (15,000 hrs @ $9/hr).
4. Of the factory labor, 80% was direct and 20% indirect.
5. Applied manufacturing overhead based on direct labor hours to work-in-process.
6. Determined actual manufacturing overhead other than those items already recorded, $92,000. (Credit Accounts Payable).
7. Ending Inventories of work-in-process and finished goods were $32,000 and $57,000, respectively. Determine the cost of finished goods (credit WIP) and the cost of goods sold (credit FG inventory). Make separate entries.
8. Transferred the balance in Manufacturing Overhead to Cost of Goods Sold.

Answer 1

Solution: No Account title Material inventory Accounts payable Debit Credit 39000 39000 b work in process inventory Manufacturing overhead Material inventory 31000 11000 42000 c&d work in process inventory Manufacturing overhead wages payable 108000 27000 135000 165000 work in process inventory Manufacturing overhead (15000*11) 165000 92000 Manufacturing overhead Accounts payable 92000 272000 Finished goods inventory work in process inventory (31000+108000+165000-32000) 272000 cost of goods sold Finished goods inventory (43000+272000-57000) 258000 258000 35000 Manufacturing overhead cost of goods sold 11000+27000-165000+92000 35000 **overhead rate=Estimated MOH/Estimated DLH 176000/16000