Question

View Policies Current Attempt in Progress Crawford Corporation incurred the following transactions 1. 2 3 4. Purchased raw materials on account $55.500. Raw Materials of $43,700 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $7.600 was classified as indirect materials Factory labor costs incurred were $65.600, of which $50,000 pertained to factory wages payable and $15,600 pertained to employer payroll taxes payable. Time tickets indicated that $55,400 was direct labor and $10.200 was indirect labor. Manufacturing overhead costs incurred on account were $83.700. Depreciation on the company's office building was $8.900. Manufacturing overhead was applied at the rate of 150% of direct labor cost Goods costing $89.100 were completed and transferred to finished goods. Finished goods costing $84, 300 to manufacture were sold on account for $113 100 6. 9 Journalize the transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually) No. Account Titles and explanation Debit Credit (2)

Answer 1

There are two seperate sets of books of accounts vis financial books of accounts and cost book of accounts. And the entries to be done on both accounts are also different. So we prepare and integrated books of account which combines entries of both books of accounts. This question is related to integrated books of accounts concept.

JOURNAL ENTRIES

In the books of xyz ltd. for the year ending 31 mar 20__

Date	Particulars	Amount (DR.)	Amount (Cr.)
1.	Raw Material Control A/c      Dr.                  To Creditors A/c	55500	55500
2.	Work-in-progress A/c    Dr. Factory overhead A/c    Dr.                  To Raw Material control A/c	36100 7600	43700
3.	Factory overhead A/c   Dr.                 To wages control A/c	10200	10200
4.	Work in progress A/c   Dr.                To wages control A/c	55400	55400
5.	Costing p and l A/c      Dr.                To Factory overhead A/c	83700	83700
6.	Administration overhead A/c Dr. To Accumulated depreciation A/c	8900	8900
7.	Work-in-progress A/c    Dr. To Factory overhead control A/c	83100	83100
8.	Finished stock control A/c   Dr.         To work-in-progress control A/c	89100	89100
9.	Debtors A/c        Dr.        To Sales control A/c	113100	113100
10.	Sales control Dr.         To p and l A/c (Being profit transferred to p and l A/c)	28800	28800

1. Raw material purchased on account means on credit so entry will be raw material a/c dr to creditors.

2.Raw material transferred to the factory is 43700, out of which 7600  was indirect material and all indirect material related to factory goes to factory overhead control a/c. so we have trfd. indirect material to factory o/h with 7600.

Direct material goes to work in progress account so balance amount i.e.36100 trfd. to wip a/c accordingly.

3. In this entry we have not classified wages payable further. Because we know whether it is factory wages payable or employer payeoll tax payable goes to factory wages A/c.

4. factory wages further classified as direct and indirect labour. As we know all direct labour is charged to work in progress account so we transferred 55400 to wip a/c accordingly.

As direct labour will be charged to wip, Indirect labour will be charged to factory overhead a/c. so we have trfd. 10200 to factory overhead A/c

5. Manufacturing Cost incurred i.e factory overhead incurred is to be transferred to costing p and l a/c.

6.Depreciation of office building will be charged as administrative overhead because it belongs to office. if depreciation belongs to factory building we will consider it as factory overhead

7. As manufacturing overhead charged to wip a/c. we debited wip a/c with 83100

Manufacturing overhead charged = 150% of direct labour

Manufacturing overhead charged = 150% of 55400 = 83100

8. Entry of transfer of finished goods to finished goods control a/c is

finished stock control A/c Dr.

To work-in-progress A/c

9.Sale of finished stock will be done through sales control a/c, and the entry will be

Debtors A/c dr.

To sales control A/c

10 profit on sales will be transferred to costing p and l i.e. 28800.