Question

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The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company's fiscal year. a. Raw materials purchased on account, $210,000. Raw materials issued to production, $190,000 ($152,000 direct materials and $38,000 indirect b. materials). c. Direct labor cost incurred, $50,000; indirect labor cost incurred, $20,000. d. Depreciation recorded on factory equipment, $106,000. e. Other manufacturing overhead costs incurred during October, $130,000 (credit Accounts Payable). f. The company applies manufacturing overhead cost to production on the basis of $5 per machine- hour. A total of 76,300 machine-hours were recorded for October. g. Production orders costing $514,000 according to their job cost sheets were completed during october and transferred to Finished Goods. h. Production orders that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 26% above cost. Required: 1. Prepare journal entries to record the information given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Raw materials purchased on account, $210,000. Note: Enter debits before credits. Transaction General Journal Debit Credit a. View general journal Record entry Clear entry 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000. Work in Process Manufacturing Overhead Beg. Bal, Beg. Bal. End. Bal. End. Bal.

Answer 1

Solution 1:

Journal Enteries - Polaris Company
S. No	General Journal	Debit	Credit
a	Raw Material Inventory Dr	$210,000.00
	To Accounts Payable		$210,000.00
	(Raw material purchased on account)
b	Work In Process Dr	$152,000.00
	Manufacturing Overhead Dr	$38,000.00
	To Raw Material Inventory		$190,000.00
	(Being Raw material used in production)
c	Work In Process Dr	$50,000.00
	Manufacturing Overhead Dr	$20,000.00
	To Wages Payable		$70,000.00
	(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	$130,000.00
	To Accounts Payable		$130,000.00
	(Being other manufacturing overhead cost incurred)
f	Work In Process Dr (76300 * $5)	$381,500.00
	To Manufacturing overhead		$381,500.00
	(Being manufacturing overhead applied to prodcution)
g	Finished Goods Inventory Dr	$514,000.00
	To Work In Process		$514,000.00
	(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*126%)	$565,740.00
	To Sales Revenue		$565,740.00
	(To record sales on account)

solution 2:

Manufacturing Overhead Account
Particulars	Debit	Particulars	Credit
To Raw material inventory	$38,000.00	By Work In Process	$381,500.00
To Wages Payable	$20,000.00
To Accumulated depreciation - Factory Equipment	$106,000.00
To Accounts Payable	$130,000.00
To Ending balance	$87,500.00
Total	$381,500.00	Total	$381,500.00

Work in Process Account
Particulars	Debit	Particulars	Credit
To Beginning Balance	$36,000.00	By Finished goods inventory	$514,000.00
To Raw Material Inventory	$152,000.00	By Ending balance	$105,500.00
To Wages Payable	$50,000.00
To Manufacturing overhead applied	$381,500.00
Total	$619,500.00	Total	$619,500.00