Question

Exercise 3-5 (Algo) Journal Entries and T-accounts [LO3-1, LO3-2) The Polaris Company uses a job order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials). c. Accrued direct labor cost of $50,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $106,000. e. Other manufacturing overhead costs accrued during October, $130,000. 1. The company applies manufacturing overhead cost to production using a predetermined rate of $9 per machine-hour. A total of 76,500 machine-hours were used in October 9. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 38% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process Post the relevant transactions from above to each account Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $37,000.

Answer 1

2 DO Amount Mano facturing Overhead Particolar Amount Particolar Raw Material Inventory | 38000 Work in Process salary & wage payable 21000 Inventory Accumulated Depreciation 106000 Accounts Payable 130000 688500 688500 393,500 Amount 688500 Ending Balance Work in Process loventory Particular Amount Particular Beginning Balance Raw Material Inventory loventory salary & wage payable 50000 Manufacturing overhead 688500 927,500 Ending Balance 415500 37000 Anished goods 152000 512000 927,500