Question

E3-29A Record journal entries (Learning Objectives 2, 3, 5, & 6) The following transactions were incurred by Whooley Fabricators during January, the first month of its fiscal year. Requirements 1. Record the proper journal entry for each transaction. a. $205,000 of materials was purchased on account. b. $174,000 of materials was used in production; of this amount, $146,000 was used on specific jobs. c. Manufacturing labor and salaries for the month totaled $210,000. $200,000 of the total manufacturing labor and salaries was traced to specific jobs, and the remain- der was indirect labor used in the factory. d. The company recorded $16,000 of depreciation on the plant and plant equipment. The company also received a plant utility bill for $14,000. e. $56,000 of manufacturing overhead was allocated to specific jobs. 2. By the end of January, was manufacturing overhead overallocated or underallocated? By how much?

Answer 1

Answer-:

1). Journal entry in the books of whooley fabricators for given transactions are as follows-:

S.no.	Particulars	Debit	Credit
a).	Raw materials inventory........dr	205000
	To accounts payable a/c		205000
b).	WIP inventory..........................dr	146000
	Manufacturing overhead.........dr	28000
	To raw material inventory A/c		174000
c).	WIP inventory.............................dr	200000
	Manufacturing overhead............dr	10000
	To wages payable		210000
d).	Manufacturing overhead..............dr	30000
	To accounts payable a/c		14000
	To accumulated depreciation		16000
e).	WIP inventory.................................dr	56000
	To manufacturing overhead a/c		56000

2). Calculation of under or over allocation of manufacturing overhead are as follows-:

Allocated overhead to specified jobs = $56,000

Actual overhead incurred

= Indirect material+ indirect labour+ depreciation

= 28,000+ 10,000+ 30,000

= $58,000

So, there is an underallocation of manufacturing overhead of $2,000.

Thankyou.......