Question

Problem 15-3A Source documents, journal entries, and accounts in job order costing LO P1, P2, P3 [The following information applies to the questions displayed below.) Widmer Watercraft's predetermined overhead rate for year 2015 is 200% of direct labor. Information on the company's production activities during May 2015 follows. a. Purchased raw materials on credit, $220,000. b. Materials requisitions record use of the following materials for the month. Job 136 Job 137 Job 138 Job 139 Job 140 $ 49,500 32,500 20,200 22,800 7,200 Total direct materials Indirect materials 132,200 21,500 Total materials used $153,700 c. Paid $15,250 cash to a computer consultant to reprogram factory equipment. d. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 Job 137 Job 138 Job 139 Job 140 $ 12,000 10,500 38,100 39,400 3,400 Total direct labor Indirect labor 103.400 26.000 Total $129,400 e. Applied overhead to Jobs 136, 138, and 139. f. Transferred Jobs 136, 138, and 139 to Finished Goods. g. Sold Jobs 136 and 138 on credit at a total price of $535,000. h. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance). Depreciation of factory building Depreciation of factory equipment Expired factory insurance Accrued property taxes payable $69,500 37,500 12,000 35,000 i. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

Answer 1

Solution 1:

	Job No. 136	Job No. 137	Job No. 138	Job No. 139	Job No. 140
Materials	$49,500.00	$32,500.00	$20,200.00	$22,800.00	$7,200.00
Labor	$12,000.00	$10,500.00	$38,100.00	$39,400.00	$3,400.00
Overhead	$24,000.00	$21,000.00	$76,200.00	$78,800.00	$6,800.00
Total cost	$85,500.00	$64,000.00	$134,500.00	$141,000.00	$17,400.00

Solution 2:
Journal Entries - Widmer Watercraft
Event	Particulars	Debit	Credit
a	Raw material inventory Dr	$220,000.00
	To Accounts Payable		$220,000.00
	(To record purchase of raw material)
b	Work In Process Dr	$132,200.00
	Factory overhead Dr	$21,500.00
	To Raw material inventory		$153,700.00
	(To record raw material used in production)
c	Factory overhead Dr	$15,250.00
	To Cash		$15,250.00
	(Cash paid to consultant for reporgram factory equipment)
d	Work In Process Dr	$103,400.00
	Factory overhead Dr	$26,000.00
	To Cash		$129,400.00
	(To record direct and indirect labor payment and assigment to production)
e	Work In Process Dr	$179,000.00
	To Factory Overhead		$179,000.00
	(To apply overhead to Job 136, 138, 139)
f	Finished goods inventory Dr	$361,000.00
	To Work In Process		$361,000.00
	(Being completed jobs transferred to finished goods)
g1	Accounts receivables Dr	$535,000.00
	To Sales Revenue		$535,000.00
	(To record sales of Job 136 and 138)
g2	Cost of goods sold Dr	$220,000.00
	To Finished goods inventory		$220,000.00
	(To record cost of goods sold for Job 136 and 138)
h	Factory overhead Dr	$154,000.00
	To Accumulated depreciation - Factory Building		$69,500.00
	To Accumulated depreciation - Factory Equipment		$37,500.00
	To Prepaid insurance		$12,000.00
	To Property taxes payable		$35,000.00
	(To record overhead incurred)
i	Work In Process Dr	$27,800.00
	To Factory Overhead		$27,800.00
	(To apply overhead to Job 137 and 140)

Solution 3:
Raw material Inventory
Event	Debit	Event	Credit
a	$220,000.00	b	$153,700.00
		Ending Balance	$66,300.00
Total	$220,000.00	Total	$220,000.00
Work In Process Inventory
Event	Debit	Event	Credit
b	$132,200.00	f	$361,000.00
d	$103,400.00	Ending Balance	$81,400.00
e	$179,000.00
i	$27,800.00
Total	$442,400.00	Total	$442,400.00
Finished Goods Inventory
Event	Debit	Event	Credit
f	$361,000.00	g	$220,000.00
		Ending Balance	$141,000.00
Total	$361,000.00	Total	$361,000.00
Cost of goods sold
Event	Debit	Event	Credit
g	$220,000.00	Ending balance	$220,000.00
Total	$220,000.00	Total	$220,000.00
Manufacturing Overhead
Event	Debit	Event	Credit
b	$21,500.00	e	$179,000.00
c	$15,250.00	i	$27,800.00
d	$26,000.00	Underapplied overhead	$9,950.00
h	$154,000.00
Total	$216,750.00	Total	$216,750.00

Solution 4:
Report of Job Cost Sheet - Widmer Watercraft
Particulars	Amount
Work In Process Inventory:
Job 137	$64,000.00
Job 140	$17,400.00
Balance	$81,400.00
Finished Goods Inventory:
Job 139	$141,000.00
Balance	$141,000.00
Cost of goods sold:
Job 136	$85,500.00
Job 138	$134,500.00
Balance	$220,000.00