Question

Custom Cabinetry has one job in process (Job 120) as of June 30, at that time, its job cost sheet reports direct materials of $7,700, direct labor of $3,900, and applied overhead of $3,315. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on account) for $25,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July. July Product Costs Job 120 Job 121 Job 122 Total Direct materials $1,600 $6,300 $3,700 $11,600 Direct labor 2,200 4,200 2,200 8,600 Overhead applied ? ? ? ? 1. Prepare journal entries for the following in July. a. Direct materials used in production b. Direct labor used in production c. Overhead applied d. The sale of Job 120. e. Cost of goods sold for Job 120. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries for the above transactions in July

Answer 1

1. Prepare journal entries for the following in july? Answer: S.No. a Debit $ 11,600.00 Credit Account Titles & Explanation Work-in process inventory a/c Raw materials inventory a/c (Being direct materials used in production) - WN $ 11,600.00 b b $ 8,600.00 Work-in process inventory a/c Factory payroll payable a/c (Being direct labor used in production) - WN $ 8,600.00 $ 7,310.00 Work-in process inventory a/c Factory overhead a/c (Being factory overheads applied) - WN $ 7,310.00 d $ 25,000.00 Accounts receivables a/c Sales revenue a/c (Being sale of Job 120 on account) - Given $ 25,000.00 (0 $ 20,585.00 $ 20,585.00 Cost of goods sold a/c Finished goods inventory a/c (Being cost of goods sold for Job 120 transfer) (7700+3900+3315+1600+2200+1870)

2. Compute balances of the Work-in process inventory and the finished goods inventory accounts? Answer: From Working Note Finished Goods Work-in Process Particulars Job 121 Job 122 Direct Materials $ 6,300.00 $ 3,700.00 Direct Labor 4,200.00 $ 2,200.00 Overheads Applied $ 3,570.00 $ 1,870.00 Total $ 14,070.00 $ 7,770.00

Working Note: July Product Costs Direct Materials Direct Labor Overhead Applied Overhead Applied Computation Comment in case of any queries in the above solution. Job 120 Job 121 Job 122 Total $ 1,600.00 $ 6,300.00 $ 3,700.00 $ $ 2,200.00 $ 4,200.00 $ 2,200.00 $ $ 1,870.00 $ 3,570.00 $ 1,870.00 $ 2200X85% 4200X85% 2200X85% 11,600.00 8,600.00 7,310.00