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, $189,000 ($151,200 direct materials and $37,800 indirect materials). C. Accrued direct labor cost of $48,000 and indirect labor cost of $20,000. d. Depreciation recorded on factory equipment, $106,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $10 per machine-hour. A total of 76,000 machine-hours were used in October. g. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 32% 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:

1) Preparation of Journal Entries:

Transaction	General Journal	Debit ($)	Credit ($)
a.	Raw Material Inventory	209,000
	Accounts Payable		209,000
b.	Work in process Inventory	151,200
	Manufacturing Overheads	37,800
	Raw Material Inventory		189,000
c.	Work in process Inventory	48,000
	Manufacturing Overheads	20,000
	Wages Payable		68,000
d.	Manufacturing Overheads	106,000
	Accumulated Depreciation		106,000
e.	Manufacturing Overheads	130,000
	Accounts Payable		130,000
f.	Work in process Inventory	760,000
	Manufacturing Overheads(76,000*10)		760,000
g.	Finished Goods Inventory	512,000
	Work in process Inventory		512,000
h.1	Cost of Goods Sold	449,000
	Finished Goods Inventory		449,000
h.2	Accounts Receivable (449,000* 1.32)	592,680
	Sales Revenue		592,680

2) Preparation of T Accounts :

Work In Process
Beg. Balance	36,000	Finished Goods Inventory	512,000
Raw Material Inventory	151,200
Wages Payable	48,000
Manufacturing Overheads	760,000
End. Balance	483,200

Manufacturing Overhead
Beg. Balance	-	Work in process Inventory	760,000
Raw Material Inventory	37,800
Wages Payable	20,000
Accumulated Depreciation	106,000
Accounts Payable	130,000
		End. Balance	466,200

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