Question

The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.

a.	Raw materials purchased on account, $210,000.
b.	Raw materials issued to production, $190,000 ($152,000 direct materials and $38,000 indirect materials).
c.	Direct labor cost incurred, $49,000; indirect labor cost incurred, $20,000.
d.	Depreciation recorded on factory equipment, $106,000.
e.	Other manufacturing overhead costs incurred during October, $130,000 (credit Accounts Payable).
f.	The company applies manufacturing overhead cost to production on the basis of $9 per machine-hour. A total of 76,200 machine-hours were recorded for October.
g.	Production orders costing $515,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h.	Production orders that had cost $448,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 34% above cost.

Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $34,000.

Answer 1

No	Transaction	General Journal	Debit	Credit
1	a	Raw materials	210,000
		Accounts payable		210,000
2	b	Work in progress	152,000
		Manufacturing overhead	38,000
		Raw materials		190,000
3	c	Work in progress	49,000
		Manufacturing overhead	20,000
		Salaries and wages payable		69,000
4	d	Manufacturing overhead	106,000
		Accumulated depreciation		106,000
5	e	Manufacturing overhead	130,000
		Accounts payable		130,000
6	f	Work in progress	685800
		Manufacturing overhead		685800
		76,200*9
7	g	Finished goods	515,000
		Work in progress		515,000
8	h(1)	Cost of goods sold	448,000
		finished goods		448,000
9	h(2)	Accounts receivable	600320
		sales		600320
		448000+448000*34%

Manufacturing overhead
b	38,000	f	685800
c	20,000
d	106,000
e	130,000
		End Balance	391,800
Work in progress
Beg balance	34,000
b	152,000	g	515,000
c	49,000
f	685800
End Balance	405,800