Question

Widmer Watercraft's predetermined overhead rate is 200% of direct labor. Information on the company's production activities during May follows. a. Purchased raw materials on credit, $200,000 b. Materials requisitions record use of the following materials for the month. Job 136 Job 137 Job 138 Job 139 Job 140 Total direct materials Indirect materials Total materials used $ 49,500 32,500 19,600 23,000 6,800 131,400 21,560 $152,900 c. Paid $15,500 cash to a computer consultant to reprogram factory equipment. d. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 Job 137 Job 138 Job 139 Job 140 Total direct labor Indirect labor Total $ 12,200 10,800 37,500 39,400 3.300 103,700 26,000 $129,700

Answer 1

Journal Entries:

Question 2 Transaction General Journal Debit Credit Raw Materials Inventory $ 200,000 Accounts Payable (To record purchase of raw material on account) $ 200,000 b. Goods in Process Inventory $ Factory Overhead $ Raw Material Inventory (To record the consumption of raw material) 131,400 21,500 $ 152,900 $ 15,500 c. Factory Overhead Cash (To record payment of indirect labor) $ 15,500 Goods in Process Inventory $ Factory Overhead $ Factory Payroll (To record the consumption of raw material) 103,700 26,000 $ 129,700

Journal Entries:

Question 2 Transaction General Journal Debit Credit Goods in Process Inventory $ 178,200 Factory Overhead $ 178,200 (To record application of overhead) Overhead applied to jobs = Direct Labor of Job 136, 138 and 139 X Overhead Rate Overhead applied to jobs = ($12,200 + $37,500 + $39,400) X 200% = $178,200 Finished Goods Inventory $ 359,400 Goods in Process Inventory $ 359,400 (To record completion of Jobs 136, 138, and 139) Total cost of Job 136 = Materials + Direct Labor + Overhead Applied Total cost of Job 136 = $49,500 + $12,200 + $ 24,400 Total cost of Job 136 = $86,100 Total cost of Job 138 = $19,600 + $37,500 + $75,000 Total cost of Job 138 = $132,100 Total cost of Job 139 = $23,000 + $39,400 + $78,800 Total cost of Job 139 = $141,200 Total cost of all Jobs = $86,100 + $132,100 + $141,200 Total cost of all Jobs = $359,400

Journal Entries:

Credit Debit $ 530,000 Transaction General Journal 8(1) Accounts Receivable Sales (To record sale of Job 136 and 138) $ 530,000 8(2) Cost of goods sold $ 218,200 Finished goods inventory (To record cost of goods sold of Job 136 and 138) $ 218,200 $ 156,000 $ 69,500 Factory Overhead Accumulated Depreciation - Factory Building Accumulated Depreciation - Factory Equipment Prepaid Insurance Property Taxes Payable (To record overhead costs) $ $ $ 38,500 11,000 37,000 Goods in Process Inventory $ 29,200 Factory Overhead $ 29,200 (To record application of overhead) Overhead applied to jobs = Direct Labor of Job 137 and 140 x Overhead Rate Overhead applied to jobs = ($10,800 + $3,800) X 200% = $29,200