Question

Job Cost Flows, Journal Entries

On April 1, Sangvikar Company had the following balances in its inventory accounts:

Materials Inventory	$12,760
Work-in-Process Inventory	21,350
Finished Goods Inventory	8,800

Work-in-process inventory is made up of three jobs with the following costs:

	Job 114	Job 115	Job 116
Direct materials	$2,804	$2,640	$3,650
Direct labor	1,800	1,560	4,300
Applied overhead	1,080	936	2,580

During April, Sangvikar experienced the transactions listed below.

1. Materials purchased on account, $30,000.
2. Materials requisitioned: Job 114, $16,500; Job 115, $12,400; and Job 116, $5,000.
3. Job tickets were collected and summarized: Job 114, 150 hours at $15 per hour; Job 115, 220 hours at $17 per hour; and Job 116, 80 hours at $18 per hour.
4. Overhead is applied on the basis of direct labor cost.
5. Actual overhead was $4,765.
6. Job 115 was completed and transferred to the finished goods warehouse.
7. (1) Job 115 was shipped, and (2) the customer was billed for 135 percent of the cost.

Required:

1. Prepare journal entries for the April transactions.

a.	Materials
	Accounts Payable
b.	Work in Process
	Materials
c.	Work in Process
	Wages Payable
d.	Work in Process
	Overhead Control
e.	Overhead Control
	Various Accounts
f.	Finished Goods
	Work in Process
g (1).	Cost of Goods Sold
	Finished Goods
g (2).	Accounts Receivable
	Sales Revenue

2. Calculate the ending balances of each of the inventory accounts as of April 30. Post the entries to the T-accounts in the same order in which they were journalized. ***please include what account letter referenced above or if it is a balance.

Materials

Work in Process

Finished Goods

Answer 1

1.

Predetermined overhead rate = Applied overhead / Direct labor cost

Predetermined overhead rate = $4,596 (1,080+936+2,580) / $7,660 (1,800+1,560+4,300)

Predetermined overhead rate = 60%

a	Materials	$30,000
	Accounts payable		$30,000
b	Work in process ($16,500+12,400+5,000)	$33,900
	Materials		$33,900
c	Work in process ($2,250+3,740+1,440)	$7,430
	Wages payable		$7,430
d	Work in process ($7,430*60%)	$4,458
	Overhead control		$4,458
e	Overhead control	$4,765
	Various accounts		$4,765
f	Finished goods	$23,520
	Work in process		$23,520
g	Cost of goods sold	$23,520
	Finished goods		$23,520
	Accounts receivable ($23,520*135%)	$31,752
	Sales revenue		$31,752

Job 115 = Direct material+Direct labor+Applied overhead

Job 115 = $15,040 ($2,640+12,400) + 5,300 (1,560+3,740) + 3,180 (5,300*60%) = $23,520

2.

Material
Beg.Bal.	$12,760
a	30,000	$33,900	b
End.Bal.	$8,860
Work In Process
Beg.Bal.	$21,350
b	33,900	$23,520	f
c	7,430
d	4,458
End.Bal.	$43,618
Finished Goods
Beg.Bal.	$8,800
f	23,520	$23,520	g
End.Bal.	$8,800