Question

4. Peralta Inc. has provided the following information for 2019. Prepare the journal entries to record these transactions.

1. Purchased raw materials on account for $145,000.

2. Issued $115,000 in raw materials to production ($22,000 were not traceable to specific jobs).

3. Incurred $115,000 in direct labor costs (14,375 hours) and $62,500 in supervision costs (paid in cash).

4. Incurred the following additional manufacturing overhead costs: factory lease $24,000 (paid in cash); depreciation on equipment $20,000; custodial supplies $7,500 (paid in cash).

5. Incurred the following nonmanufacturing costs, both paid in cash: advertising $75,000; sales commissions $88,000.

6. Applied manufacturing overhead to jobs in process at a rate of $10 per direct labor hour.

7. Completed jobs costing a total of $345,000.

8. Sold jobs for $425,000 on account. The cost of the jobs was $342,000.

9. Closed the Manufacturing Overhead account balance.

Answer 1

a)	Raw Materials Inventory	145000
	Accounts payable		145000
	(To record purchase of raw materials on account)
b)	Work in Process Inventory	93000
	Manufacturing Overhead	22000
	Raw Materials Inventory		115000
	(To record requisition of raw materials)
c)	Work in Process Inventory	115000
	Manufacturing Overhead	62500
	Cash		177500
	(To record direct labor & supervision incurred)
d)	Manufacturing Overhead	51500
	Accumulated Depreciation		20000
	Cash		31500
	(To record man. Overhead incurred)
e)	Advertising expense	75000
	Commission expense	88000
	Cash		163000
	(To record non man. Overhead incurred)
f)	Work in Process Inventory ( 10 x 14375)	143750
	Manufacturing Overhead		143750
	(To record allocation of overhead)
g)	Finished Goods Inventory	345000
	Work in process Inventory		345000
	(To record completion of goods)
h)	Accounts Receivable	425000
	Sales		425000
	(To record sales on account)
	Cost of goods sold	342000
	Finished goods Inventory		342000
	(To record cost of goods sold)
i)	Manufacturing Overhead	7750
	Cost of goods Sold		7750
	(To adjust overapplied OH in Cogs)

Overapplied OH = Applied OH - Actual OH

= 143750 - (22000 + 62500 + 51500)

= 7750