Question

Corcovado Industries makes specialized clothing for businesses in the food and beverage 4. ag Sepkeions SeptDirect materials costing $60,000 were purchased on account. Direct materials costing $32,850 were requested into production (all were Job A). used on 3 4 Indirect materials were purchased for cash, $32,830 8 The company issued checks for the following factory overhead costs: Utilities, S3,210; manufacturing insurance, $4,025: and repairs, $4,640 Direct materials costing $34,510 (all used on Job A) and indirect materials costing $6,480 were requested into production. Recorded the following gross wages and salaries for employees: direct labor, S69,200 (all for Job A); indirect labor, $21,610; manufacturing supervision, S36,900; and sales commissions, $22,980. Overhead was applied to production. 10 1S 15 22 The company issued checks for the following factory overhead costs: utilities, 23 27 30 $4,270; maintenance, $3,380; and rent, $3,250 Direct materials costing $41,940 and indirect materials costing $8,260 were purchased. Production requisitioned $28,870 of direct materials (Job A, $2,660; Job B, S8,400; Job C, $17,810) and $7,640 of indirect materials. Recorded the following gross wages and salaries for employces: direct labor, S64,220 (Job A, $44,000; Job B, $9,000; Job C, S11,220); indirect labor, $30,290; manufacturing supervision, $28,520; and sales commissions, $36,200. Manufacturing overhead was applied to production. Jobs A (58,840 units) and B (3,525 units) were completed and transferred to finished goods inventory. (Compute unit cost for each job; round to nearest cent). Job A was shipped to the customer and the customer was billed for the sale. It is Ricardo's practice to charge 40% over cost ofproduction to allow adequate gross profit to cover period costs and profit. The company uses a perpetual inventory system. Adjusting entries for the following were recorded: $4,680 for depreciation, factory equipment; $5,230 for property taxes for factory, payable at month end. 30 30 30 30 Manufacturing overhead is applied at a rate of 125 percent of direct labor cost. Record the entries in journal form and post to the following T-Accounts: Materials Inventory, Work in Process Inventory, Finished Goods Inventory Factory Overhead, Cash, Accounts Receivable, Accumulated Depreciation Manufacturing Equipment, Accounts Payable, Wages and Salaries Payable, Property Taxes Payable, Sales, Cost of Goods Sold, and Selling and Administrative Expenses. Compute ending balances in Materials, Work-in-process, Finished Goods, and Factory Overhead. a. on- b. c. Make the journal entry to dispose of under/over applied overhead and post to the T-accounts.

Answer 1

JOURNAL ENTRIES CORCOVADO INDUSTRIES

DATE	PARTICULARS	L.F	DEBIT       $	CREDIT $
SEP -1	MATERIAL    A/c      Dr To ACCOUNTS PAYABLE (BEING PURCHASE OF RAWMATERIAL ON CREDIT)		60000	60000
SEP-3	WORK IN PROCESS (JOB-A) A/c Dr To MATERIAL (MATERIAL ISSUED TO PRODUCTION JOB-A)		32850	32850
SEP-4	FACTORY OVERHEAD A/c Dr To CASH (BEING INDIRECT MATERIAL PURCHASED FOR CASH)		32830	32830
SEP-8	FACTORY OVERHEAD A/c Dr To BANK (being check issued for the overhead expenses utilities ,insurance and repair)		11875	11875
SEP-10	WORK IN PROCESS (JOB-A) A/c Dr To MATERIAL (MATERIAL ISSUED TO PRODUCTION JOB-A)		34510	34510
SEP-15	DIRECT WAGES A/c Dr FACTORY OVERHEAD A/c Dr SELLING AND ADMINISTRATION EXPENSE A/c To WAGES SALARIES PAYABLE (BEING WAGES AND SALARIES EXPENSE INCCURED)		69200 58510 22980	150690
SEP-15	WORK IN PROCESS (JOB-A) A/c Dr To FACTORY OVERHEAD A/c Dr (OVERHEAD EXPENSE APPLIED TO PRODUCTION @125% OF DIRECT WAGES 69200*125%)		86500	86500
SEP-15	WORK IN PROCESS (JOB-A) A/c Dr To DIRECT WAGES A/c (WAGES CHARGED TO PRODUCTION)		69200	69200
SEP-22	FACTORY OVERHEAD A/c Dr To BANK (being check issued for the overhead expenses utilities ,maintenance and rent)		10900	10900
Sep-23	MATERIAL    A/c      Dr FACTORY OVERHEAD A/c Dr To ACCOUNTS PAYABLE (BEING PURCHASE OF RAWMATERIAL ON CREDIT)		41940 8260	50200
SEP-27	WORK IN PROCESS (JOB-A) A/c Dr WORK IN PROCESS (JOB-B) A/c Dr WORK IN PROCESS (JOB-C) A/c Dr   To MATERIAL (MATERIAL ISSUED TO PRODUCTION JOB-A,B&C)		2660 8400 17810	28870
SEP-30	DIRECT WAGES A/c Dr FACTORY OVERHEAD A/c Dr SELLING AND ADMINISTRATION EXPENSE A/c To WAGES SALARIES PAYABLE (BEING WAGES AND SALARIES EXPENSE INCCURED)		64220 58810 36200	159230
SEP-30	WORK IN PROCESS (JOB-A) A/c Dr WORK IN PROCESS (JOB-B) A/c Dr WORK IN PROCESS (JOB-C) A/c Dr To FACTORY OVERHEAD A/c Dr (OVERHEAD EXPENSE APPLIED TO PRODUCTION @ 125% OF DIRECT WAGES)		55000 11250 14025	80275
SEP-30	WORK IN PROCESS (JOB-A) A/c Dr WORK IN PROCESS (JOB-B) A/c Dr WORK IN PROCESS (JOB-C) A/c Dr To DIRECT WAGES A/c (WAGES CHARGED TO PRODUCTION		44000 9000 11220	64220
SEP-30	FINISHED GOODS INVENTORY (JOB-A) A/c Dr FINISHED GOODS INVENTORY (JOB-B) A/c Dr To WORK IN PROCESS( JOB-A )A/c To WORK IN PROCESS (JOB-B) A/c (BEING COMPLETION OF GOODS AND TRANSFERRED TO INVENTORY) COST PER UNIT JOB –A = 291870/58840= 4.96 COST PER UNIT JOB-B =28650/3525=8.12		291870 28650	291870 28650
SEP-30	COST OF GOODS SOLD A/c Dr To FINISHED GOODS INVENTORY (JOB-A) (BEING FINISHED GOODS TRANSFERD TO COST OF GOODS SOLD)		291870	291870
SEP-30	CUSTOMER A/c   Dr To SALES (BEING GOODS SOLD CUSTOMER @ 40% PROFIT ON COST OF PRODUCTION)		408618	408618
SEP-30	ACCUMULATED DEPRECIATION A/c Dr PROPERTY TAXES A/c                          Dr To FACTORY EQUIPMENT    To PROPERTY TAX PAYABLE A/c (BEING DEPRECIATION CHARGED ON FACTORY EQUIPMENT AND PROPERTY TAX INCCURED)		4680 5230	4680 5230