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 Direct materials Job 120 Job 121 Job 122 Total $6,000 $2,500 $9,500 2,100 $1,000 2,200 3,700 Direct labor 8,000 Overhead applied 1. Prepare journal entries for the following 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.) Complete this question by entering your answers in the tabs below. Required 2 Required 1 Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.) Work in Process Finished Goods Job # Direct materials Direct labor Overhead Total cost < Required 1 Required 2 >

Answer 1

Journal entry

No	account and explanation	Debit	Credit
a	Work in process	9500
	Direct material		9500
	(To record direct material used)
b	Work in process	8000
	Wages payable		8000
	(To record direct labor)
c	Work in process (8000*80%)	6400
	Manufacturing overhead		6400
	(To record applied overhead)
d	Account receivable	22000
	sales revenue		22000
	(to record sales)
e	Cost of goods sold	16000
	Work in process		16000
	(To record cost of goods sold)

Calculate following

	Work in process	Finished goods
Job	122	122
Direct material	2500	6000
Direct labor	2100	3700
Overhead	1680	2960
Total	6280	12660