Question

Exercise 3-5 Journal Entries and T-accounts (L03-1, LO3-2) The Polaris Company uses a job-order costing system. The following transactions occurred in October a. Raw materials purchased on account, $211,000. b. Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials). c. Accrued direct labor cost of $49,000 and indirect labor cost of $20,000. d. Depreciation recorded on factory equipment, $106,000. e. Other manufacturing overhead costs accrued during October, $129,000 1. The company applies manufacturing overhead cost to production using a predetermined rate of $6 per machine-hour. A total of 76.400 machine-hours were used in October 9. Jobs costing $513,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 24% above cost. Required: 1. Prepare journal entries to record the transactions given above 2. Prepare T-accounts for Manufacturing Overhead and Work in Process Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35.000 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevantar

Answer 1

Solution 1:

Journal Enteries - Polaris Company
S. No	General Journal	Debit	Credit
a	Raw Material Inventory Dr	$211,000.00
	To Accounts Payable		$211,000.00
	(Raw material purchased on account)
b	Work In Process Dr	$151,200.00
	Manufacturing Overhead Dr	$37,800.00
	To Raw Material Inventory		$189,000.00
	(Being Raw material used in production)
c	Work In Process Dr	$49,000.00
	Manufacturing Overhead Dr	$20,000.00
	To Wages Payable		$69,000.00
	(Being labor cost accrued)
d	Manufacturing overhead Dr	$106,000.00
	To Accumulated depreciation - Factory Equipment		$106,000.00
	(Being depreciation charged on factory equipment)
e	Manufacturing overhead Dr	$129,000.00
	To Accounts Payable		$129,000.00
	(Being other manufacturing overhead cost incurred)
f	Work In Process Dr (76400 * $6)	$458,400.00
	To Manufacturing overhead		$458,400.00
	(Being manufacturing overhead applied to prodcution)
g	Finished Goods Inventory Dr	$513,000.00
	To Work In Process		$513,000.00
	(Being cost of completed goods transferred to finished goods)
h-1	Cost of goods sold Dr	$449,000.00
	To Finished Goods Inventory		$449,000.00
	(Being cost of unit sold transferred to COGS)
h-2	Accounts Receivables Dr ($449,000*124%)	$556,760.00
	To Sales Revenue		$556,760.00
	(To record sales on account)

Solution 2:

Manufacturing Overhead Account
Particulars	Debit	Particulars	Credit
To Raw material inventory	$37,800.00	By Work In Process	$458,400.00
To Wages Payable	$20,000.00
To Accumulated depreciation - Factory Equipment	$106,000.00
To Accounts Payable	$129,000.00
To Ending balance	$165,600.00
Total	$458,400.00	Total	$458,400.00

Work in Process Account
Particulars	Debit	Particulars	Credit
To Beginning Balance	$35,000.00	By Finished goods inventory	$513,000.00
To Raw Material Inventory	$151,200.00	By Ending balance	$180,600.00
To Wages Payable	$49,000.00
To Manufacturing overhead applied	$458,400.00
Total	$693,600.00	Total	$693,600.00