Question

OBJ. 2 EX 17-3 Cost of materials issuances under the FIFO method An incomplete subsidiary ledger of materials inventory for May is as follows: RECEIVED ISSUED BALANCE Receiving Roport Number Quantity Materials Unit Requisition Price 1 Number Quantity Amount Quantity 285 Unit Price Amount $30.00 $8,550 130 110 $32.00 38.00 Date May 1 May 4 May 10 May 21 May 27 91 365 97100 a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO. b. Determine the materials inventory balance at the end of May. c. Journalize the summary entry to transfer materials to work in process. d. Explain how the materials ledger might be used as an aid in maintaining inventory quantities on hand. EX 17-4 Entry for issuing materials Materials issued for the current month are as follows: Requisition No. Material Job No. 201 Aluminum 500 202 Plastic 503 203 Rubber 504 Indirect 205 Journalive the entry to record the issuance of materials. Amount $88.700 27,600 3.650 2.250 38,750 204 Glue Steel 510

Answer 1

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Answer 17-3
Answer a	Perpetual FIFO
Date	Received	Issued	Balance
No. of Units	Cost per unit	Amount	No. of Units	Cost per unit	Cost of Goods sold	No. of Units	Cost per unit	Inventory Balance
1-May							285.00	30.00	8,550.00
4-May	130.00	32.00	4,160.00				285.00	30.00	8,550.00
							130.00	32.00	4,160.00
10-May				285.00	30.00	8,550.00	50.00	32.00	1,600.00
				80.00	32.00	2,560.00
21-May	110.00	38.00	4,180.00				50.00	32.00	1,600.00
							110.00	38.00	4,180.00
27-May				50.00	32.00	1,600.00	50.00	38.00	1,900.00
				50.00	38.00	1,900.00
Ending Inventory				465.00		14,610.00	50.00		1,900.00

Answer b
Ending Inventory is $ 1,900.
Answer c	Journal Entry
Date	Account	Debit $	Credit $
31-May	Work in Process	14,610.00
	Material Control		14,610.00

Answer d

Material ledger is very helpful in maintaining inventory quantities because it records material received, issued and balance. It gives the true picture of inventory balance at any point of time.

Answer 17-4

Only glue is indirect so it will go to factory overhead and everything else will go to work in process directly.

Account	Debit $	Credit $
Work in Process	158,700.00
Factory overhead	2,250.00
Material Control		160,950.00

Answer 17-7

Answer a

Labor cost relating to specific jobs will go to work in process and labor costs for Process Improvement will go to Factory overhead.

Calculation of Direct labor costs:

	Job 301	Job 302	Job 303	Total	Rate	Direct labor	Process Improvement	Indirect labor
Tom Couro	10.00	15.00	13.00	38.00	32.00	1,216.00	2.00	64.00
David Clancy	12.00	12.00	14.00	38.00	26.00	988.00	2.00	52.00
Jose Cano	11.00	13.00	15.00	39.00	28.00	1,092.00	1.00	28.00
Total						3,296.00		144.00

Account	Debit $	Credit $
Work in Process	3,296.00
Factory overhead	144.00
Factory Labor		3,440.00

Answer b

Job 301 and 302 are completed but no sold so this is finished goods inventory. Direct labor costs will come under Finished goods inventory in Balance Sheet.

Job 303 is incomplete so this is work in process inventory. Direct labor costs will come under Work in process inventory in Balance Sheet.

Answer 17-8	Direct labor
Job 201	5,250.00
Job 202	6,100.00
Job 203	4,280.00
Job 204	5,620.00
Total	21,250.00
Labor rate	50.00
Labor Hours	425.00
Factory Overhead rate	25.00
Factory Overhead applied	10,625.00

Account	Debit $	Credit $
Work in Process	21,250.00
Factory overhead	2,785.00
Factory Labor		24,035.00
Account	Debit $	Credit $
Work in Process	10,625.00
Factory overhead		10,625.00