Question

Divine Homes manufactures prefabricated chalets in Colorado. The company uses a perpetual inventory system and a job cost system in which each chalet is a job. The following events occurred during May: (Click the icon to view the events.) Read the requirements Requirement 1. Record the events in the general journal. (Record debits first, then credits. Exclude explanations from any journal entries.) Start with the entry from event (a). Purchased materials on account, $420,000. x - Journal Entry Requirements Date Accounts Debit Credit a V Accounts Payable Accounts Receivable Accumulated Depreciation Equipment Cash Cost of Goods Sold Finished Goods Inventory Manufacturing Overhead Prepaid Insurance Raw Materials Inventory Sales Revenue Wages Payable Work in Process Inventory 1. Record the preceding events in the general journal. 2. Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. 3. Summarize the job costs of the unfinished chalet and show that this equals the ending balance in Work in Process Inventory. 4. Summarize the job cost of the completed chalet that has not yet been sold and show that this equals the ending balance in Finished Goods Inventory. 5. Compute the gross profit on each chalet that was sold. What costs must the gross profit cover for Divine Homes? Print Done Choose from an and then click Check Answer.

Answer 1

38 Credit Debit 420,000 39 Date Account Title & Explanation a Raw Material inventory Accounts Payable (To record purchase of material) 40 420,000 41 42 43 82,800 31,200 44 b Work in Process Inventory (14000+28200+19500+21100) Manufacturing Overhead Wages Payable (To record Direct and Indirect wages) 45 114,000 46 47 48 226,100 49 c Work in Process Inventory (41200+56100+62500+66300) Raw Materials Inventory (To record use of raw material) 226,100 50 51 52 6,800 53 d Manufacturing Overhead Accumulated Depreciation -Equipment (To record depreciation on equipment) 6,800 54 55 56 18,000 57 e Manufacturing Overhead Cash Prepaid Insurance (To record equipment rental and expired insurance) 10,000 8,000 58 59

49,680 61 62 f) Work in Process Inventory (82800*60%) Manufacturing Overhead (To record applied Overheads) 49,680 63 64 Total 257,360 65 66 67 68 g) Finished Goods Inventory Work in Process Inventory (To record cost of goods manufactured) 257,360 Direct Material Direct Labor Manufacturing Overheads Total Chalet 13 41200 14000 8400 63600 Chalet 15 62500 19500 11700 93700 Chalet 16 66300 21100 12660 100060 170000 54600 32760 257360 240,000 69 70 h) Accounts Receivable (94000+146000) Sales Revenue (To record sale of goods) 240,000 71 72 73 163,660 74 Cost of Goods Sold (63600+100060) Finished Goods Inventory (To record cost of goods sold for Chalet 13 &16) 163,660 75 76