Question

Prepare the journal entries for the following situations

a. Purchased $100,000 of material

b. Transferred $50,000 of material to WIP-Sewing

c. Labor cost of $100,000 were incurred ($40,000 – Cutting, $50,000 – Sewing, $10,000 – Indirect Labor)

d. Allocate overhead to the Sewing department (10% of Direct Labor Cost)

e. Transferred $80,000 from WIP - Cutting to WIP – Sewing

f. Transferred $20,000 from WIP - Sewing to Finished Goods Inventory

g. Sold $30,000 worth of Inventory for $50,000

Answer 1

Transaction	Account	Debit	Credit
a	Raw Materials Inventory	$ 100,000
	Accounts Payable / Cash		$ 100,000
	(To record purchase of raw materials)
b	Work in Process - Sewing	$   50,000
	Raw Materials Inventory		$   50,000
	(To record transfer of materials)
c	Work in Process - Sewing	$   50,000
	Work in Process - Cutting	$   40,000
	Manufacturing Overhead	$   10,000
	Wages Payable		$ 100,000
	(To record direct and indirect labor)
d	Work in Process - Sewing	$      5,000
	Manufacturing Overhead		$      5,000
	(To record overhead applied to sewing department)
e	Work in Process - Sewing	$   80,000
	Work in Process - Cutting		$   80,000
f	Finished Goods Inventory	$   20,000
	Work in Process - Sewing		$   20,000
	(To transfer completed goods to finished goods)
g	Cost of Goods Sold	$   30,000
	Finished Goods Inventory		$   30,000
	(To record manufacturing cost of items sold)
	Accounts Receivable	$   50,000
	Sales		$   50,000
	(To record sales)