Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $211,000. b. Raw materials used in production, $192,000 ($153,600 direct materials and $38,400 indirect materials). c. Accrued direct labor cost of $50,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $105,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $10 per machine-hour. A total of 76,200 machine-hours were used in October. g. Jobs costing $515,000 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 34% 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 $36,000.

Answer 1

Credit Requirement (1) Transaction General Journal a. Raw Materials Accounts Payable Debit $ 211,000 Requirement (2) Work in process beg Bal. $ 36,000 $ 515,000 g. b. $ 153,600 C. $ 50,000 f. $ 762,000 $ 211,000 b. Work in process Manufacturing Overhead Raw Materials $ 153,600 $ 38,400 $ 192,000 End Bal. $ 486,600 C. Manufacturing Overhead Work in process Manufacturing Overhead Salaries and wages payable $ 50,000 $ 21,000 $ 71,000 b. C. $ 38,400 $ 762,000 f. $ 21,000 $ 105,000 $ 130,000 d. $ 105,000 Manufacturing overhead Accumulated Depreciation - Equipment d. $ 105,000 e. e. Manufacturing overhead accounts payable $ 130,000 End Bal. $ 467,600 $ 130,000 f. $ 762,000 Please comment down for any further assistance. Work in process Manufacturing Overhead $ 762,000 g. Finished Goods Work in Process $515,000 $ 515,000 (h) Cost of goods sold Finished goods $ 449,000 $ 449,000 Accounts Receivable Sales $601,660 $601,660