Question

2

The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials). C. Accrued direct labor cost of $49,000 and indirect labor cost of $20,000. d. Depreciation recorded on factory equipment, $106,000. e. Other manufacturing overhead costs accrued during October, $129,000. f. The company applies manufacturing overheed cost to production using a predetermined rate of $8 per machine- hour, A total of 76.200 machine-hours were used in October. g. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h Jobs that had cost $453,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 22% above cost Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35,000.

Answer 1

As most of the journal entries are correct I have only done incorrect journal entries.

No.	Transaction	General Journal	Debit	Credit
2	b.	Work in process	$151200
		Manufacturing overhead	$37800
		Raw materials		$189000
		(To record raw materials used in production)
5	e.	Manufacturing overhead	$129000
		Accounts payable		$129000
		(To record other manufacturing overhead costs)
8	h(1)	Cost of goods sold	$453000
		Finished goods		$453000
		(To record cost of goods sold)
9	h(2)	Accounts receivable ($453000*1.22)	$552660
		Sales		$552660
		(To record jobs sold on account)

2)

Manufacturing Overhead					Work in Process
b.	37800	609600	f.		Beg. Bal.	35000
c.	20000				b.	151200	512000	g.
d.	106000				c.	49000
e.	129000				f.	609600
End. Bal.		316800			End. Bal.	332800