Question

ng system ng system is m H versted costs. e ntine Wal duct III. Problem 1 (10 points) Company X recorded the following transactions this past month 1. $20,000 in raw materials were purchased on credit 2. $140,000 in raw materials were requisit direct materials and the remainder as indirect materials. 3. Total labour cost of $130,000 were incurred. remainder as indirect labour. 4. Manufacturing overhead of $75,000 was applied. 1 Were requisitioned for use in productions. Of this amount S110,000 was $130,000 were incurred. Of this amount $90,000 was for direct labour and the a) Prepare the journal entries for these transactions. b) Assumin V Assuming that manufacturing overhead had a balance of zero at the beginning of this month, was it overapplied or underapplied? (hint prepare the T-account), and accordingly prepare the adjusting entry.

Answer 1

No.	Account titles and explanation	Debit	Credit
1.	Raw materials inventory	$20000
	Accounts payable		$20000
	(To record raw materials purchase on credit)
2.	Work in process inventory	$110000
	Manufacturing overhead ($140000-110000)	$30000
	Raw materials inventory		$140000
	(To record raw materials used in production)
3.	Work in process inventory	$90000
	Manufacturing overhead ($130000-90000)	$40000
	Salaries and wages payable		$130000
	(To record labor cost incurred)
4.	Work in process	$75000
	Manufacturing overhead		$75000
	(To record manufacturing overhead applied)

(b)

2.	30000	75000	4.
3.	40000
End. bal.		$5000

No.	Account titles and explanation	Debit	Credit
1.	Manufacturing overhead	$5000
	Cost of goods sold		$5000
	(To record overapplied overhead adjusted to cost of goods sold)