Question

The following costs were incurred in February by Container Corp., which produces customized steel storage bins: Direct material purchased on account $197,600 Direct material used for jobs: Job #217 $116,480 Job #218 18,720 Other jobs 139,360 274,560 Direct labor costs for month: Job #217 $27,040 Job #218 36,400 Other jobs 50,960 114,400 Actual overhead costs for February 572,000 The balance in Work in Process Inventory on February 1 was $43,680, which consisted of $29,120 for Job #217 and $14,560 for Job #218. The February beginning balance in Direct Material Inventory was $115,960. Actual overhead is applied to jobs at a rate of $4.95 per dollar of direct labor cost. Job #217 was completed and transferred to Finished Goods Inventory during February. Job #217 was delivered to the customer at the agreed-upon price of cost plus 35 percent. a. Prepare journal entries to record the preceding information. Note: List any multiple debits or any multiple credits in alphabetical order by account name. Credit Debit 197600 0 197600 0 116480 18720 139360 0 0 0 274560 27040 36400 50960 0 0 0 0 114400 Account 1 Raw Material Inventory Cash or Payables To record raw materials purchased on account 2 WIP-Job 217 WIP-Job 218 ✓ WIP-other jobs Direct Material Inventory To record the direct materials issued 3 WIP-Job 217 WIP-Job 218 WIP-other jobs Cash or Payables To record the labor costs 4 Manufacturing Overhead Control Various accounts To record actual overhead costs 5 WIP-Job 217 WIP-Job 218 WIP-other jobs Manufacturing Overhead Control To record the application of OH 6 Finished Goods Inventory WIP-Job 217 To record completion of job #217 7 Cash or Receivables Sales record sales 8 Cost of Goods Sold Finished Goods Inventory To record the cost of sales 572000 0 0 572000 0 133848 180180 252252 0 0 0 566280 07 X 0 X X 0 0 X 0 Ox 0 OX b. Determine the February ending balance in WIP Inventory. $ 0 X c. How much of the balance determined in part (b) relates to Job #218? $ 0 X

Answer 1

Req a.
Note: First five entries are correctly given, the solutions starts from Entry no.6
Job Cost Sheet
			Job 217	Job 218	Other Jobs
Beginning balance		29,120	14,560
Add: Current cost incurred
Direct Material		1,16,480	18,720	1,39,360
Direct Labour		27,040	36,400	50,960
Manufacturing overheads applied	1,33,848	1,80,180	2,52,252
Total Current cost		2,77,368	2,35,300	4,42,572
Total Job Cost		3,06,488	2,49,860	4,42,572
Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
6	Finished Goods inventory		3,06,488
	Work in process inventory			3,06,488
	(for goods completed)
7	Cash or Receivables			4,13,759
	Sales revenue (306,488+35%)			4,13,759
	(for sale of Job)
8	Cost of goods sold			3,06,488
	Finished Goods inventory			3,06,488
	(for cost of goods sold for Job 217)
Req b.
Computation of WIP inventory at end:
Cost of Job 218:		2,49,860
Cost of Other Job:		4,42,572
WIP inventory at end		6,92,432
Req c.
Balance relates to Job 218:	2,49,860