Question

I Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,400, direct labor of $4,200, and applied overhead of $3,780. Custom Cabinetry applies overhead at the rate of 90% of direct labor cost During July, Job 120 is sold (on account) for $27,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July. July Product Conts Job 120 Job 121 Job 122 Total Direct materials $2,500 $7,700 $4,100 $14,300 Direct labor 3,400 4,100 2,400 Overhead applied 9,900 7 7 7 7 1. Prepare journal entries for the following in July, a. Direct materials used in production, b. Direct labor used in production c. Overhead applied d. The sale of Job 120 e. Cost of goods sold for Job 120. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.) Complete this question by entering your answers in the tabs below.

Answer 1

Solution

1)

Journal entry

No	Account & Explanation	Debit ($)	Credit ($)
a	Work in process	14,300
	Direct material		14,300
	(To record direct material used)
b	Work in process	9,900
	Wages payable		9,900
	(To record direct labor)
c	Work in process (9,900*90%)	8,910
	Manufacturing overhead		8,910
	(To record applied overhead)
d	Account receivable	27,000
	sales revenue		27,000
	(to record sales)
e	Cost of goods sold ($7400+$4200+$3,780 $ 2,500+$3,400+$3400x90%)	24,340
	Work in process		24,340
	(To record cost of goods sold)

2) Balance of work in process & finished goods

	Work in process	Finished Goods
Job	121	122
Direct material	$7,700	$4,100
Direct labor	$41,00	$2,400
Overhead	$3,690	$2,160
Total	$15,490	$8,660

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