Question

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $6,000, direct labor of $2,800, and applied overhead of $2,240. Custom Cabinetry applies overhead at the rate of 80% of direct labor cost. During July, Job 120 is sold (on account) for $22,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July. July Product Costs Job 120 Job 121 Job 122 Total Direct materials $1,000 $6,000 $2,500 $9,500 Direct labor 2,200 3,700 2,100 8,000 Overhead applied ? ? ? ? 1. Prepare journal entries for the following transactions and events a through e in July. a. Direct materials used in production. b. Direct labor used in production. c. Overhead applied. d. The sale of Job 120. e. Cost of goods sold for Job 120. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Answer 1

No.	Accounts	debit	cedit
a	Work in process inventory	9500
	raw materials inventory		9500
b	Work in process inventory	8000
	factory payroll payable		8000
c	Work in process inventory	6400
	factory overhead		6400
d	Accounts receivable	22000
	sales		22000
e	cost of goods sold	16000
	finished good inventory		16000
	6000+2800+2240+1000+2200+1760

Ques 2

	Work in process	Finished goods
Job	job122	job121
Direct materials	2500	6000
direct labor	2100	3700
OH	1680	2960
total	6280	12660

working

	job120	job121	job122	total
DM	1000	6000	2500	9500
DL	2200	3700	2100	8000
OH App	1760	2960	1680	6400
	2200*0.8	3700*0.8	2100*0.8