Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. 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 $20,000. d. Depreciation recorded on factory equipment, $104,000. e. Other manufacturing overhead costs accrued during October, $131,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,200 machine-hours were used in October. g. Jobs costing $515,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $448,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 36% 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 $36,000.

Answer 1

Answer:

Journal entries:
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Raw material Inventory		210000
	Accounts payable				210000
b.	Work in process invventory		152000
	Manufacturing overheads		38000
	Raw material inventory			190000
c.	Work in process inventory		50000
	Manufacturing overheads		20000
	Wages payable				70000
d.	Manufacturing overheads		104000
	Accumulated depreciation			104000
e.	Manufacturing overheads		131000
	Accounts payable				131000
f.	Work in process inventory		381000		(76200*5)
	Manufacturing overheads			381000
g.	Finished Goods inventory		515000
	Wwork in proces inventory			515000
h.	Cost of goods sold			448000
	Finished Goods inventory			448000
	Accounts receivable			609280
	Sales revenue (448000+36%)			609280
Req 2.
Manufacturing overheads
Raw material inventory		38000	Work in process inv.	381000
Wages payable	20000	(76200 MH @ 5)
Accumulated dep	104000
Accounts payable	131000
			Balance		88000
Work in Process inventory
Balance		36000	Finished Goods Inventory	515,000
Raw material inventory	152000
Wages Payable	50000
Manufacturing Overheads	381000
Balance		104000