Question

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2020, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $21,600, direct labor $12,960, and manufacturing overhead $17,280. As of January 1, Job 49 had been completed at a cost of $97,200 and was part of finished goods inventory. There was a $16,200 balance in the Raw Materials Inventory account. During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $131,760 and $170,640, respectively. The following additional events occurred during the month. 1. 2. 3. Purchased additional raw materials of $97,200 on account. Incurred factory labor costs of $75,600. Of this amount $17,280 related to employer payroll taxes. Incurred manufacturing overhead costs as follows: indirect materials $18,360; indirect labor $21,600; depreciation expense on equipment $12,960; and various other manufacturing overhead costs on account $17,280. Assigned direct materials and direct labor to jobs as follows. 4. Job No. 50 51 Direct Materials $10,800 42,120 32,400 Direct Labor $5,400 27,000 21,600 52

Answer 1

Solution

   Journal Entry

Trans	Account title & Explanation	Debit	Credit
1.	Raw Material Inventory A/c	$97,200
	To Accounts Payable A/c		$97,200
	(Being raw material purchased)
2.	Factory Labor A/c	$75,600
	To Factory Wages Payable A/c		$58,320
	To Employer Payroll Taxes Payable A/c		$17,280
	(Being labor charges paid)
3.	Manufacturing Overheads A/c	$70,200
	To Accounts payable A/c		$17,280
	To Accumulated Depreciation A/c		$12,960
	To Raw Material Inventory A/c		$18,360
	To Factory labor A/c		$21,600
	(Being Overhead charged)

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