Question

Exercise 3-5 Journal Entries and T-accounts [LO3-1, LO3-2) The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account. $209,000 b. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials). c. Accrued direct labor cost of $50,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $105,000 e. Other manufacturing overhead costs accrued during October $131,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour . A total of 76,200 machine-hours were used in October 9. Jobs costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 30% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $34,000.

journal entries for each transaction

and t accounts

Answer 1

Transaction credit General Journal Debit Raw Materials $209,000 Accounts Payable (10 second raw materials purchased) $209,000 ܕܬ Work in process Manufacturing overhead Raw Materials Yo recond hand materials used) $152,000 $ 38,0 0-0 $ 190,000 $50,000 $21,000 Work in Process Manufacturing over head Salaries and wages Payable to record direct and indirect labor cost acerued) $ 71,000 Manufacturing Overhead Accumulated depreciation (to record depreciation) $ 105,000 $ 105,000 Manufacturing overhead $131,000 Accounts Payable (to record other manufacturing Overhead cost $ 131,000

f Work in process $ 533,400 Manufactusing Overhead (to record manufacturing overhead) $533,400 g finished goods $511,000 Work in proces Yo record job sheet transferred) $511,000 h (1) Cost of goods sold $452,000 finished goods $ $452,000 to seard job shipped to customers) (2) Accounts Receivable 587,600 Sales (Yo record sales calculation: ifs Manufacturing overhead a 76,200 machine houra x $ 7 per machine hour $533,400 $587,600 - h (2) accounts Receivable $452,000 +(452,000 X 307) = $ 452,000 + $ 135,600 $ 587,600

dy ܝ ܬ Manufacturing Overhead $ 38,000 $ 533,400 $ 21,000 $ 105,000 $ 131,000 End. Bale $230,400 Work in process Beg Bal. $ 34,000 $ 152,000 $511,000 $ 50,000 f $ 533,400 b. g End. Balo $ 258,400