Question

Waterways has two major public-park projects to provide with comprehensive irrigation in one of its service locations this month. Job J57 and Job K52 involve 15 acres of landscaped terrain, which will require special-order, sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December.

Raw materials were requisitioned from the company’s inventory on December 2 for $5,091; on December 8 for $1,050; and on December 14 for $3,495. In each instance, two-thirds (2/3) of these materials were for J57 and the rest for K52.

Six time tickets were turned in for these two projects for a total amount of 18 hours of work. All the workers were paid $17.5 per hour. The time tickets were dated December 3, December 9, and December 15. On each of those days, 6 labor hours were spent on these jobs, two-thirds (2/3) for J57 and the rest for K52.

The predetermined overhead rate is based on machine hours. The expected machine hour use for the year is 2,096 hours, and the anticipated overhead costs are $838,400 for the year. The machines were used by workers on projects K52 and J57 on December 3, 9, and 15. Six machine hours were used for project K52 (2 each day), and 8.5 machine hours were used for project J57 (2.5 the first day and 3 each of the other days). Both of these special orders were completed on December 15, producing 200 sprinkler heads for J57 and 100 sprinkler heads for K52.

Additional job order activities during this period included:

Dec.	1		Purchased raw materials from Sunland Supply Company on account for $53,500.
Dec.	2		Issued $40,400 of direct materials from the company’s inventory to jobs other than K52 and J57 and $3,000 of indirect materials.
Dec.	12		Paid Waterways’ factory salaries and wages for $65,500.
Dec.	13		Paid the factory’s water bill of $9,000.
Dec.	18		Transferred $50,500 of costs from other completed jobs to finished goods.
Dec.	21		Paid the factory’s electric bill of $11,900 for Waterways’ factory.
Dec.	31		Made adjusting entries forth factory that included accrued property taxes of $12,100, prepaid insurance of $8,700, and accumulated depreciation of $16,000.

Journalize the activities from these job cost sheets in the general journal. Also, journalize the other costs that occurred during this period. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit (To assign materials to jobs 357 & K52) 12/2 (To assign materials to jobs and overhead) (To assign labor to jobs 257 & K52) (To assign overhead to jobs 357 & K52)

Answer 1

Working:

Predetermined overhead rate = $838400/2096 hours = $400 per machine hour

Date	Description	Job No. J57	Job No. K52
12/2	Direct materials	3394	1697
12/3	Direct labor	70	35
12/3	OH	1000	800
12/8	Direct materials	700	350
12/9	Direct labor	70	35
12/9	OH	1200	800
12/14	Direct materials	2330	1165
12/15	Direct labor	70	35
12/15	OH	1200	800
	Total cost $	10034	5717

Date	Account Titles and Explanations	Debit	Credit
12/1	Raw Materials Inventory	53500
	Accounts Payable		53500
12/2	Work in Process Inventory	5091
	Raw Materials Inventory		5091
	(To assign materials to jobs J57 & K52)
12/2	Work in Process Inventory	40400
	Manufacturing Overhead	3000
	Raw Materials Inventory		43400
	(To assign materials to jobs and overhead)
12/3	Work in Process Inventory	105
	Factory Labor (6 hours x $17.50)		105
	(To assign labor to jobs J57 & K52)
12/3	Work in Process Inventory	1800
	Manufacturing Overhead [(2.5 + 2) x $400]		1800
	(To assign overhead to jobs J57 & K52)
12/8	Work in Process Inventory	1050
	Raw Materials Inventory		1050
12/9	Work in Process Inventory	105
	Factory Labor		105
	(To assign labor to jobs J57 & K52)
12/9	Work in Process Inventory	2000
	Manufacturing Overhead [(3 + 2) x $400]		2000
	(To assign overhead to jobs J57 & K52)
12/12	Factory Labor	65500
	Cash		65500
12/13	Manufacturing Overhead	9000
	Cash		9000
12/14	Work in Process Inventory	3495
	Raw Materials Inventory		3495
12/15	Work in Process Inventory	105
	Factory Labor		105
	(To assign labor to jobs J57 & K52)
12/15	Work in Process Inventory	2000
	Manufacturing Overhead [(3 + 2) x $400]		2000
	(To assign overheads to jobs J57 & K52)
12/15	Finished Goods Inventory ($10034 + $5717)	15751
	Work in Process Inventory		15751
	(To record completion of jobs K57 & K52)
12/18	Finished Goods Inventory	50500
	Work in Process Inventory		50500
12/21	Manufacturing Overhead	11900
	Cash		11900
12/31	Manufacturing Overhead	36800
	Property Taxes Payable		12100
	Prepaid Insurance		8700
	Accumulated Depreciation		16000

Date	Account Titles and Explanations	Debit	Credit
12/31	Cost of goods sold	3600
	Manufacturing overhead		3600