Question

Her System Announcements CALCULATOR PRINTER VERSION Exercise 4-17 The following events occurred over the course of a year at Crane Corp., which uses a job order costing system: 1. Direct materials purchases totaled $400,000. Crane Corp tracks its direct materials separately from its indirect materials. Purchases were made on account. 2. $230,000 of indirect materials were used in production. Crane uses a separate Supplies Inventory account for indirect materials. 3. $413,000 of direct materials were used in production. 4. The direct labor payroll was $940,000 (credit Wages Payable). 5. Other manufacturing overhead costs incurred during the year totaled $540,000. 6. Crane applies overhead based on a predetermined overhead rate of $15 per machine hour. The company used 50,000 machine hours during the year. 7. During the year, Crane transferred goods costing $2,051,000 Into the Finished Goods Inventory account. 8. Crane sold products with a manufacturing cost of $2,000,000 to customers during the year. Your answer is partially correct. Try again. Prepare journal entries to record these events. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in ord in the problem.) No. Account Titles and Explanation Debit Credit 1. Direct Materials Inventory Accounts Payable (To record purchase of direct materials) 2. Work in Process Inventory Supplies Inventory (To record use of indirect materials in production) Work in Process Inventory Direct Materials Inventory

Answer 1

Debit Credit

1. Direct Material Inventory        400000  

Accounts Payable 400000

(To record purchase of Direct material)

2. Work In process inventory 23000

supplies Inventory 23000

(To record use of indirect Material in production)

3. Work In process inventory 413000

Direct Material Inventory 413000

(To record use of direct material in production)

4. Work In process Inventory 940000

Wages Payable 940000

(To record direct labour payable)

5. Manufacturing Overhead 40000

Accounts Payable 40000

(To record actual manufacturing Overhead)

6. Work in Process Inventory 75000

Manufacturing Overhead    75000

(To record applied manufacturing overhead)

7. Finished Goods Inventory 2051000

Work in process Inventory 2051000

(To record transfer of completed goods to finished

goods Inventory)

8. Cost of Goods Sold 20000

Finished Goods Inventory 20000

(To record cost of goods sold for the period)

Direct Material Inventor

Debit Amount Credit Amount

Balance b/d 19000 Balance c/d 6000

Accounts Payable   400000 Work in process inventory 413000

419000 419000

Work in Process Inventory

Balance b/d 10000 Finished Goods Inventory 2051000

Suppplies Inventory 23000

Overhead 1015000

Balance c/d 1003000

2051000 2051000

Manufacturing Overhead

Accounts Payable 40000 Balance C/d 115000

Manufacturing overhead 75000

115000 115000

Finished Goods Inventory

Balance b/d 30000 Cost of goods sold   20000

Work in Process Inventory 2051000 Balance c/d 2061000

2081000 2081000