Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 30 May 31 $ $ 43,000 10,200 63, eee 52,000 21,300 35,600 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 210, eee 345,000 15,000 80, eee 120,000 1,400, eee 70% 1. Incurred other overhead costs (record credit to Other Accounts) 2. Applied overhead to work in process. Prepare journal entries for the above transactions for the month of May.

Answer 1

Date	Account title and explanation	Debit	Credit
May 31	Raw material inventory	$ 210,000
	Cash		$ 210,000
	[To record purchase of raw material]
May 31	Work in process inventory	$ 186,000
	Raw materials inventory		$ 186,000
	[To record Direct materials used]
May 31	Manufacturing Overhead	$ 15,000
	Raw materials inventory		$ 15,000
	[To record Indirect materials used]
May 31	Factory payroll	$ 345,000
	Cash		$ 345,000
	[To record cash paid for factory payroll]
May 31	Work in process inventory	$ 265,000
	Factory payroll		$ 265,000
	[To record direct wages used]
May 31	Manufacturing overhead	$ 80,000
	Factory payroll		$ 80,000
	[To record indirect wages used]
May 31	Manufacturing overhead	$ 120,000
	Other accounts		$ 120,000
	[To record other overhead costs]
May 31	Work in process inventory	$ 185,500
	Manufacturing overhead		$ 185,500
	[To record applied overhead]
May 31	Finished Goods inventory	$ 511,043
	Work in process inventory		$ 511,043
	[To record finished goods inventory]
May 31	Cost of goods sold	$ 538,443
	Finished goods inventory		$ 538,443
	[To record cost of goods sold]
May 31	Cost of good sold	$ 29,500
	Manufacturing overhead		$ 29,500
	[To record under applied manufacturing overhead]
May 31	Cash	$ 1,400,000
	Sales		$ 1,400,000
	[To record sales on cash]

Calculations:

Manufacturing overhead
Indirect materials	$ 15,000
Indirect labor	$ 80,000	Applied [$265,000 x 70%]	$ 185,500
Other Overhead	$ 120,000	Under applied	$ 29,500
Work in process
Beg.	$ 10,200
		Transferred out [Balance amount]	$ 438,900
Direct labor [$215,000 x 100/70]	$ 265,000
Applied	$ 185,000
End.	$ 21,300
Raw materials
Beg,. Bal.	$ 43,000	Direct (Balance amount)	$ 186,000
Purchases	$ 210,000	Indirect	$ 15,000
End.	$ 52,000
Finished goods
Beg	$ 63,000	Cost of goods sold [Balance amount]	$ 466,300
Transferred from	$ 438,900
End.	$ 35,600
Factory payroll
Cash	$ 345,000	Indirect wages	$ 80,000
		Direct wages	$ 265,000