Question

Exercise #2 $0 Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2020, the general ledger for Case Inc. contains the following data: Raw Materials Inventory $4,200 Work in Process Inventory $5,540 Finished Goods Inventory Factory Overhead $990 CR The beginning work in process inventory consists of three jobs: Rodgers $1,320; Stevens $2,015; and Linton $2,205. The following transactions took place during June: 1. During June, raw materials purchased on account were $5,100. 2. Total factory labor charges were $4,800 and all wages were paid in cash. 3. A summary of materials requisition slips and time tickets for June shows the following Materials Requisition Time Customer Job Slips Tickets Rodgers $ 1,100 $ 1,240 Koss 500 000 800 Stevens 13000 1200 Linton 2000 9300 go 360 sub-totals $ 4,900 $ 3,600 General use 1,500 1,200 Totals $ 6,400 $ 4,800 4. The pre-determined overhead rate is $1.25 per dollar of direct labor cost (or 125% of direct labor cost). 5. Additional overhead costs included $900 depreciation on factory equipment and $400 of miscellaneous costs incurred on account. 6. The patios for customers Rodgers, Stevens, and Linton were completed during June and were then sold for a total of $38,900 cash. Instructions A. Enter the transactional data in the cost flow T-accounts and job cost sheets. B. Prepare the required journal entries for the transactions in the general journal. c. Verify the ending balances of the Work in Process by reconciling to the job cost sheets. D. How will the under or over-applied overhead be reported on the financial statements at the end of the month?

Answer 1

Journal Entries:
Date	Acc titles	Debit $	Credit $
1	Raw Material	5100
	Acc Payable		5100
	(RM purchased on credit)
2	Factory Payroll	4800
	Cash		4800
	(Factory labor charges paid)
3	WIP- Mat.	4900
	Factory OH-Ind. Mat.	1500
	WIP - Labor	3600
	Factory OH - Ind. Lab	1200
	Raw Material		6400
	Factory Payroll		4800
	(material and labor charged to production)
4	WIP	4500		3600*1.25
	Factory OH		4500
	(Application of the overhead)
5	Factory OH	1300
	Acc Depreciation		900
	Misc. costs		400
	(overhead costs incurred)
6	Finished Jobs Inv.	16240
	WIP		16240
	(transfer of finished jobs from WIP)
Job	Rodgers	Stevens	Linton	Total
Begin Bal.	1320	2015	2205	5540
added Mat.	1100	1300	2000	4400
added Lab.	1240	1200	360	2800
added OH	1550	1500	450	3500
Total costs	5210	6015	5015	16240
6	Cash	38900
	Sales revenue		38900
	(sale of finished Jobs)
T-Accounts:
DEBIT	AMOUNT $	CREDIT	AMOUNT $
RM Inventory
OB	4200	WIP	4900
Pur	5100	F OH	1500
		CB	2900
Factory Payroll
Cash	4800	WIP	3600
		F OH	1200
Factory Overhead
RM	1500	OB	990
F Payroll	1200	WIP	4500
Dep	900
Misc.	400
CB	1490
WIP Inventory
OB	5540	FG Inven.	16240
RM	4900	CB	2300
F Payroll	3600
F Overhead	4500
Finished goods Inventory
OB	0	COGS	16240
WIP	16240
COGS EXP.
FG Inventory	16240
Total costs calculation:
Job	Rodgers	Stevens	Linton	Koss	Total
Begin Bal.	1320	2015	2205	0	5540
added Mat.	1100	1300	2000	500	4900
added Lab.	1240	1200	360	800	3600
added OH	1550	1500	450	1000	4500
Total costs	5210	6015	5015	2300	18540