Question

Problem 4 (Textbook Reference: P2-4) - Demonstrate job costing Log Cabin Homes, Inc. uses a job cost system to account for itsjobs, which are prefabricated houses. As of January 1, 2014 its records showed inventories as follows Materials and supplies Work in process (Job Nos. 22 and 23) Finished goods (Job No. 21) S100,000 $180,000 S140,000 The work in process inventory consisted of two jobs: Direct Manufacturing Overhead Job No Materials S 36,000 40,000 S S 40,000 S 28,000 S S 76,000 S 68,000 S Direct Labor Total 20,000 $ 96,000 16,000 S 84,000 36.000 $180,000 23 Cost and sales data for 2014 1. Materials purchased on account, $400,000 2. Direct materials used: Job No. 22, $60,000; Job No. 23, S120,000; Job No. 24, $180,000. Indirect materials used, $10,000 Direct labor costs: Job No. 22, $100,000; Job No. 23, $200,000; and Job No. 24, $80,000. Indirect labor costs, $80,000 Overhead is assigned to jobs at $100 per machine-hours. Job No. 22 used 500 machine-hours, Job No. 23 used 1,000 machine-hours, and Job No. 24 used 300 machine hours in January 3. 4. 5. Job Nos. 22 and 23 were completed and transferred to Finished Goods Inventory. 6. Job Nos. 21 and 22 were sold on account for S1,200,000, total. 7. Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation, $80,000 and heat, light, power, miscellaneous, $40,000 Required a. Prepare journal entries to assign the preceding costs to jobs. Show the appropriate entries debiting Finished Goods Inventory and Cost of Goods Sold. Transfer overapplied or underapplied overhead to Cost of Goods Sold·/Hint: Recreate the T-Account Template we made together in class to keep track of your job costs before you record you journal entries. A T-Account template has been provided on the next page.) b. Assuming selling and administrative expenses were $100,000, prepare and income statement for 201-4

Answer 1