Question

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $23,400, direct labor $14,040, and manufacturing overhead $18,720. As of January 1, Job 49 had been completed at a cost of $105,300 and was part of finished goods inventory. There was a $17,550 balance in the Raw Materials Inventory account. During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $142,740 and $184,860, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $105,300 on account. 2. Incurred factory labor costs of $81,900. Of this amount $18,720 related to employer payroll taxes. 3. Incurred manufacturing overhead costs as follows: indirect materials $19,890; indirect labor $23,400; depreciation expense on equipment $14,040; and various other manufacturing overhead costs on account $18,720. 4. Assigned direct materials and direct labor to jobs as follows. Job No. Direct Materials Direct Labor 50 $11,700 $5,850 45,630 29,250 52 35,100 23,400

Answer 1

Journal entry

No	Account title and explanation	Debit	Credit
1	Work in process	92430
	Raw material inventory		92430
2	Work in process	58500
	Factory labor		58500
3	Work in process (58500*1.2)	70200
	Manufacturing overhead		70200