Question

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, $188,000 ($150,400 direct materials and $37600 indirect materials). c. Accrued direct labor cost of $49.000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $104,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,300 machine-hours were used in October 9. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $450,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 34% 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Proy 3 of 6 !! Next >

Answer 1

Solution: 1) Preparation of Journal entries: S.no. General Journal a Raw material inventory Accounts payable Credit Debit $ 2,09,000 $ 2,09,000 b. Work in process inventory Manufacturing Overheads Raw material inventory $ $ 1,50,400 37,600 $ 1,88,000 c. Work in process inventory Manufacturing Overheads Wages payable $ $ 49,000 21,000 $ 70,000 d. $ 1,04,000 Manufacaturing Overheads Accumulated depreciation $ 1,04,000 e. $ 1,30,000 Manufacaturing Overheads Accounts payable $ 1,30,000 f. $ 5,34,100 Work in process inventory Manufacturing Overheads (76300 MH @ 7) $ 5,34,100 g. $ 5,12,000 Finished goods inventory Work in process inventory $ 5,12,000 h. 1 $ 4,50,000 Cost of goods sold Finished Goods ivnentory $ 4,50,000 h.2 $ Accounts receivable (450000*1.34) Sales revenue 6,03,000 $ 6,03,000 2) Preparation of T Accounts $ 5,12,000 Balance Raw material Inv. Wages Payable $ $ $ Work In Process 34,000 Finished Goods inventory 1,50,400 49,000 Manufacturing Overheads $ 5,34,100 Balance $ 2,55,500 $ 5,34,100 Balance Raw material Inv. Wages Payable ACC. Dep Accounts payable $ $ $ $ $ Manufacturing Overhead Work in process inv. 37,600 21,000 1,04,000 1,30,000 Balance $ 2,41,500 * Kindly Comment down for any clarifications/ queries and please upvote.