Question

9 [The following information applies to the questions displayed below) Marcelino Co.'s March 31 inventory of raw materials is $86,000, Raw materials purchases in April are $520,000, and factory payroll cost in April is $380,000. Overhead costs incurred in April are: indirect materials $53,000; indirect labor, $21000; factory rent, $39,000; factory utilities, $22,000, and factory equipment depreciation, $57,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $640,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 388 $ 25,000 24,000 12,000 $ 37,000 15,000 7,500 Balances on March 31 Direct materials Direct labor Applied overhead Costs during April Direct materials Direct labor Applied overhead Status on April 30 137,000 103,000 215,000 153,000 $120,000 103,000 Finished (sold) Finished (unsold) In process a. Materials purchases (on credit). b. Direct materials used in production c. Direct labor paid and assigned to Work In Process Inventory. d. Indirect labor paid and assigned to Factory Overhead. e. Overhead costs applied to Work in Process Inventory 1. Actual overhead costs incurred, including Indirect materials (Factory rent and utilities are paid in cash) 9. Transfer of Jobs 306 and 307 to Finished Goods Inventory h. Cost of goods sold for Job 306 1. Revenue from the sale of Job 306. J. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material) 2. Prepare journal entries for the month of April to record the above transactions.

Answer 1

No.	Transaction.	General Journal	Debit	Credit
1.	a.	Raw materials inventory	$520000
		Accounts payable		$520000
		(To record raw materials purchased on account)
2.	b.	Work in process inventory (137000+215000+120000)	$472000
		Raw materials inventory		$472000
		(To record direct materials used in production)
3.	c.	Work in process inventory (103000+153000+103000)	$359000
		Cash		$359000
		(To record direct labor paid and assigned)
4.	d.	Factory overhead	$21000
		Cash		$21000
		(To record indirect labor paid)
5.	e.	Work in process inventory (359000*50%)	$179500
		Factory overhead		$179500
		(To record manufacturing overhead applied)
6.	f(1)	Factory overhead	$53000
		Raw materials inventory		$53000
		(To record indirect materials used)
7.	f(2)	Factory overhead	$22000
		Cash		$22000
		(To record factory utilities paid in cash)
8.	f(3)	Factory overhead	$57000
		Accumulated depreciation- Factory equipment		$57000
		(To record depreciation)
9.	f(4)	Factory overhead	$39000
		Cash		$39000
		(To record factory rent paid in cash)
10.	g.	Finished goods inventory	$856500
		Work in process inventory		$856500
		(To record transfer of Job 306 and Job 307 to finished goods)
11.	h.	Cost of goods sold	$352500
		Finished goods inventory		$352500
		(To record cost of goods sold of Job 306)
12.	i.	Cash	$640000
		Sales revenue		$640000
		(To record sale of Job 306)
13.	j.	Cost of goods sold	$12500
		Factory overhead		$12500
		(To record underapplied overhead)

Calculation of Finished goods inventory

Finished goods inventory= Job 306+Job 307

= $352500+504000= $856500

Job 306= Beginning balance+Direct materials+Direct labor+Factory overhead

= $25000+24000+12000+137000+103000+(103000*50%)

= $352500

Job 307= $37000+15000+7500+215000+153000+(153000*50%)

= $504000

Cost of goods sold= Job 306= $352500

Calculation of Under or overapplied overhead

Actual factory overhead= $21000+53000+22000+57000+39000= $192000

Underapplied or overapplied overhead= Actual factory overhead-Applied factory overhead

= $192000-179500= $12500 underapplied

NOTE:- For any problem regarding the answer please ask in the comment section.