Question

! Required information [The following information applies to the questions displayed below.) The following information is available for Lock-Tite Company, which produces special-order security job order costing system. April 30 May 31 $ $36,000 9,000 60,000 48,000 18,800 33,100 Inventories Raw materials Work in process Finished goods Activities and information for May Raw materials purchases paid with cash) Factory payroll (paid with cash) Factory overhead Indirect materials Indirect labor Other overhead costs Sales (received in cash) Predetermined overhead rate based on direct labor cost 194,000 200,000 14,000 46,000 93,000 1,300,000 550 1. Direct labor usage. 2. Indirect labor usage. 3. Total payroll paid in cash. Prepare journal entries for the above transactions for the month of May.

Answer 1

Transaction	General Journal	Debit	Credit
1	Work-In process Inventory                       [Refer working note]	$154,000
	Factory Wages Payable / Factory payroll		$154,000
	(To record direct labor usage)

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Transaction	General Journal	Debit	Credit
2	Factory Overhead	$46,000
	Factory Wages Payable / Factory payroll		$46,000
	(To record indirect labor usage)

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Transaction	General Journal	Debit	Credit
3	Factory Wages Payable / Factory payroll	$200,000
	Cash		$200,000
	(To record the payment of total factory payroll)

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Working note - Computation of direct labor cost
Factory payroll = Direct labor cost + Indirect labor cost Direct labor cost = Factory payroll - Indirect labor cost
Factory payroll	$200,000
Deduct: Indirect labor cost	$46,000
Direct labor cost	$154,000