Question

The following account appears in the ledger after only part of the postings have been completed for July, the first month of the current fiscal year: Work in Process Duly1 Balance Direct materials Direct labor 60,200 147,000 120,000 Factory overhead is applied to jobs at the rate of 60% of direct labor cost. The actual factory overhead incurred for July was $75,000. Jobs completed during the month totaled $301,200. a. Prepare the journal entries to record (1) the application of factory overhead to production during ruly and (2) the jobs completed during July . What is the ance of the factory overhead account on July 312 was factory overhead over applied or underapplied on 31 d. Determine the balance of work in Processon 31 O 8 P 1 R H K B IN M E han

Answer 1

a. No. Credit Debit 72,000 1) $ Accounts titles and Explanation Work in Process Factory Overhead (to record application of factory overhead) $ 72,000 2) $ 301,200 Finished Goods Work in process (to record jobs completed) $ 301,200 Notes: 1) $ Direct labor Overhead application rate Factory overhead applied (120,000 60%) 120,000 60% 72,000 $ b. $ 3,000 July 31 Notes: Actual Factory Overhead Less: Factory Overhead applied Balance 75,000 72,000 3,000 c. Note: Underapplied Actual overhead was 75,000 but applied is 72,000 there underapplied by $ 3,000.

d. $ 98,000 Notes: $ Balance July 1 Direct materials Direct labor Factory Overhead applied Less: Completed Goods Work in Process July 31, Balance 60,200 147,000 120,000 72,000 301,200 98,000 $

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