Question

Question 2: Production activities of Company B for the year of 2018 are below: 1. The company purchases 800.000 TL worth material during the period. 2. Cost of direct material used in manufacturing is 500.000 TL 3. Cost of indirect material used in manufacturing is 100.000 TL 4. Total labor expenses incurred by the company is 1.000.000 TL and it can be grouped as fallows Direct labor : 800.000 TL Indirect labor : 200.000 TL 5. Predetermined manufacturing overhead rate is 150% of direct labor expense. 6. Ending WIP Inventory is 150.000 TL 7. %90 of finished goods are sold. 8. Sales revenue earned is 3.000.000 TL Actual operating and manufacturing related expenses are below: 9. Depreciation expense of marketing vehicles is 200.000 TL. 10. Depreciation expense of manufacturing machines is 450.000 TL. 11. Repair and Maintenance expense of manufacturing plant is 400.000 TL. 12. Insurance expense of manufacturing plant is 100.000 0. 00 mm Material Inventory, 75.000 TL, Jan 1 2018 WIP Inventory, 250.000 TL, Jan 1 2018 12 bo Finished Goods Inventory, 400.000 TL, Jan 1 2018 t on DDOD TOTO BOOT BIOS Y A Required: Record the journal entries of transactions for the period.

Answer 1

Answer is given below

In question it is not mentioned anything about how to treat under-absorbed overheads. I have passed the journal entry to Cost of Goods sold account

Journal Entries for the period Credit Debit $800,000 $800,000 $500,000 $500,000 $100,000 $100,000 $800,000 $800,000 $200,000 $200,000 $1,000,000 $1,000,000 $1,200,000 Journal Material Inventory control Account To Accounts Payable (Being material purchased on account) Work in process Account To Material Inventory control (Being issue of material to work in process) Manufacturing overhead control To Material inventory account (Being indirect material issued) Work in process Account To Salaries and wages payable (Being direct labor recorded) Manufacturing overhead control To Salaries and wages payable (Being indirect labor recorded) Salaries and wages payable To Cash (Being payment of Salaries) Work in process Account To Manufacturing overhead control Account (Being overhead applied to work in process) Manufacturing overhead control To Repairs and Maintenance payable To Provision for Depreciation To Insurance payable To Utilities payable (Being manufacturing overheads incurred) Marketing Expense Account To Provision for Depreciation (Being Depreciation of Marketing Vehicle) Finished Goods To Work in process Account (Being transfer of goods from WIP to Finished Goods ) Cost of Goods Sold To Finished Goods (Being transfer of Finished Goods to Cost of Goods Sold) Accounts receivable To Sales (Being sales on credit) $1,200,000 $950,000 $400,000 $450,000 $100,000 $200,000 $200,000 $2,600,000 $2,600,000 $2,700,000 $2,700,000 $3,000,000 $3,000,000 Credit Assuming Overhead under-absorbed is charged to COGS Journal Debit Cost of Goods Sold $50,000 To Manufacturing Overhead Control Account (Being Under absorbed Overhead charged to Cost of Goods Sold) $50,000 Cost Sheet Raw material consumed Direct Labor PRIME COST $500,000 $800,000 $1,300,000 $1,200,000 Overhead applied (150% of Direct Labor) Factory cost of production Add: Opening work in process Less: Closing work in process Cost of Goods manufactured Add: Opening stock of Finished Goods $2,500,000 $250,000 $2,750,000 $150,000 $2,600,000 $400,000 $3,000,000 $300,000 $2,700,000 Less: Closing stock Cost of Goods Sold