Question

Quark Spy Equipment manufactures espionage equipment. Quark uses a job-order costing system and applies overhead to jobs on the basis of direct labor-hours. For the current year, Quark estimated that it would work 180,000 direct labor-hours and incur $38,520,000 of manufacturing overhead cost. The following summarized information relates to January of the current year. The raw materials purchased include both direct and indirect materials.

Raw materials purchased on account	$	2,719,200
Direct materials requisitioned into production	$	2,503,600
Indirect materials requisitioned into production	$	190,000
Direct labor cost (15,100 hours @ $32 per hour)	$	483,200
Indirect labor cost (15,900 hours @ $21 per hour)	$	333,900
Depreciation on the factory building	$	389,800
Depreciation on the factory equipment	$	1,822,700
Utilities for the factory	$	163,800
Cost of jobs finished	$	5,133,700
Cost of jobs sold	$	4,899,500
Sales (all on account)	$	7,350,200

Required:

Prepare journal entries to record Quark's transactions for the month of January. Do not close out the manufacturing overhead account. (Omit $ sign in your response.)

	General Journal	Debit	Credit
a.	(Click to select)Raw materialsAccounts payableWork in processManufacturing overheadSalaries and wages payableAccumulated depreciation, buildingAccumulated depreciation, equipment
	(Click to select)Raw materialsAccounts payableWork in processManufacturing overheadSalaries and wages payableFinished goodsCost of goods sold
b.	(Click to select)Raw materialsAccounts payableWork in processManufacturing overheadSalaries and wages payableFinished goodsCost of goods sold
	(Click to select)Raw materialsAccounts payableWork in processManufacturing overheadSalaries and wages payableFinished goodsCost of goods sold
c.	(Click to select)Raw materialsAccounts payableManufacturing overheadFinished goodsCost of goods sold
	(Click to select)Raw materialsAccounts payableManufacturing overheadFinished goodsCost of goods sold
d.	(Click to select)Raw materialsAccounts payableWork in processSalaries and wages payableFinished goodsCost of goods sold
	(Click to select)Raw materialsAccounts payableWork in processSalaries and wages payableFinished goodsCost of goods sold
e.	(Click to select)Accounts receivableCost of goods soldFinished goodsSalaries and wages payableWork in processAccounts payable
	(Click to select)Accounts payableWork in processManufacturing overheadSalaries and wages payableAccounts receivableFinished goods
f.	(Click to select)Raw materialsAccounts payableManufacturing overheadSalaries and wages payableCost of goods soldAccounts receivable
	(Click to select)Raw materialsAccounts payableSalaries and wages payableManufacturing overheadFinished goodsAccounts receivable
g.	(Click to select)Raw materialsAccounts payableWork in processManufacturing overheadAccumulated depreciation, buildingAccumulated depreciation, equipmentCost of goods sold
	(Click to select)Utilities payable (or cash)Salaries and wages payableAccumulated depreciation, equipmentAccumulated depreciation, buildingWork in processManufacturing overheadFinished goods
	(Click to select)Accumulated depreciation, buildingManufacturing overheadFinished goodsWork in processAccumulated depreciation, equipmentSalaries and wages payableUtilities payable (or cash)
	(Click to select)Salaries and wages payableAccumulated depreciation, equipmentUtilities payable (or cash)Accumulated depreciation, buildingFinished goodsWork in processManufacturing overhead
h.	(Click to select)Raw materialsAccounts payableWork in processFinished goodsAccumulated depreciation, buildingAccumulated depreciation, equipmentAccounts receivable
	(Click to select)Raw materialsAccounts payableWork in processManufacturing overheadSalaries and wages payableFinished goodsCost of goods sold
i.	(Click to select)Raw materialsAccounts payableWork in processFinished goodsManufacturing overheadSalaries and wages payableCost of goods sold
	(Click to select)Raw materialsAccounts payableFinished goodsManufacturing overheadSalaries and wages payableAccumulated depreciation, buildingAccumulated depreciation, equipment
j.	(Click to select)Accounts receivableAccumulated depreciation, buildingAccumulated depreciation, equipmentCost of goods soldFinished goodsSalaries and wages payableManufacturing overhead
	(Click to select)Raw materialsAccounts payableSalesWork in processManufacturing overheadAccounts receivableCost of goods sold

Answer 1

	Ref.	General journal					Debit	Credit
	a.	Raw materials					2719200
		Accounts payable						2719200
		(Raw material purchased on account)
	b.	Work in process					2503600
		Raw materials						2503600
		(Direct material used)
	c.	Manufacturing overhead					190000
		Raw materials						190000
		(Indirect materials used)
	d.	Work in process					483200
		Salaries and wages payable						483200
		(Direct labor cost incurred)
	e.	Manufacturing overhead					333900
		Salaries and wages payable						333900
		(Indirect labor cost incurred)
	f.	Work in process				(Note:1)	3231400
		Manufacturing overhead						3231400
		(Manufacturing overhead applied)
	g.	Manufacturing overhead					2376300
		Depreciation expense-Building						389800
		Depreciation expense-Equipment						1822700
		Utilities payable (or cash)						163800
		(Vrious overhead expenses incurred)
	h.	Finished goods					5133700
		Work in process						5133700
		(Cost of jobs finished)
	i.	Cost of goods sold					4899500
		Finished goods						4899500
		(Cost of jobs sold)
	j.	Accounts receivable					7350200
		Sales						7350200
		(Sales on account)
	Note:1
	Predetermined overhead rate=Estimated manufacturing overhead cost/Estimated direct labor hours=38520000/180000=$ 214 per hour
	Manufacturing overhead allocated=Predetermined overhead rate*Direct labor hours used=214*15100=$ 3231400