Question

The following events occurred over the course of a year at Waterway Corp, which uses a job order costing system: 1. Direct materials purchases totaled $589,000. Waterway Corp tracks its direct materials separately from its indirect materials. Purchases were made on account. 2. $132,000 of indirect materials were used in production Waterway uses a separate Supplies Inventory account for indirect materials 3. $560,000 of direct materials were used in production 4. The direct labor payroll was $791,000 (credit Wages Payable). 5. Other manufacturing overhead costs incurred during the year totaled $689,000. 6. Waterway applies overhead based on a predetermined overhead rate of $23 per machine hour. The company used 49,000 machine hours during the year. 7. During the year, Waterway transferred goods costing $2,420,000 into the Finished Goods Inventory account 8. Waterway sold products with a manufacturing cost of $2,398,000 to customers during the year.

Answer 1

Preparation of T Accounts: Beg Bal. $ 1 $ End Bal. $ Direct Materials Inventory 30,000 5,89,000 3 $ 59,000 5,60,000 Work in Process Inventory 24,000 5,60,000 7 $ 7,91,000 11,27,000 82,000 Beg Bal. $ 3 $ 4 $ 6 $ End Bal. $ 24,20,000 11,27,000 2 $ 5 $ End Bal. $ Manufacturing Overhead 1,32,000 6 $ 6,89,000 -3,06,000 Beg Bal. $ 7 $ End Bal. $ Finished Goods Inventory 48,000 24,20,000 8 $ 70,000 23,98,000 Kindly Comment down for any clarifications/ queries and please upvote.