Question

EXERCISE 3–2 Prepare T-Accounts LO3–2, LO3–4

Jurvin Enterprises recorded the following transactions for the just completed month. The company had no beginning inventories.

a. $94,000 in raw materials were purchased for cash.

b. $89,000 in raw materials were used in production. Of this amount, $78,000 was for direct materials and the remainder was for indirect materials.

c. Total labor wages of $132,000 were incurred and paid. Of this amount, $112,000 was for direct labor and the remainder was for indirect labor.

d. Additional manufacturing overhead costs of $143,000 were incurred and paid.

e. Manufacturing overhead of $152,000 was applied to production using the company’s predetermined overhead rate.

f. All of the jobs in process at the end of the month were completed. g. All of the completed jobs were shipped to customers. h. Any underapplied or overapplied overhead for the period was closed to Cost of Goods Sold.

Required:

1. Post the above transactions to T-accounts.

2. Determine the adjusted cost of goods sold for the period.

I've seen a lot of different ways this was done.

Answer 1

Cash					Raw Materials
Beg.bal					Beg.bal
		94,000	a.		a.	94,000
		132,000	c.				89,000	b.
		143,000	d.
end bal		369,000			end bal	5,000
Work in process					finished goods
Beg.bal					Beg.bal
b.	78,000				f.	342,000
c.	112,000						342,000	g.
e.	152,000
		342,000	f.
end bal	0				end bal	0
Manufacturing overhead					cost of goods sold
Beg.bal					beg bal	0
b.	11,000				g.	342,000
c.	20,000				h.	22,000
d.	143,000
		152,000	e
		22,000	h
End bal	0				end bal	364,000