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, $192,000 ($153,600 direct materials and $38,400 indirect materials). c. Direct labor cost incurred, $49,000; indirect labor cost incurred, $21,000. d. Depreciation recorded on factory equipment, $105,000. 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 $6 per machine-hour. A total of 76,400 machine-hours were recorded for October. g. Production orders costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Production orders that had cost $450,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 32% above cost. Required: 1. Prepare journal entries to record the information given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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

The following journal entries should be prepared for the given transactions Account Titles and Explanations Debit (S)Credit (S) a. Raw Materials Invent 210,000 Accounts Payable 210,000 b. Work in Process 153,600 38.400 Manufao acturing Overhead Raw Materials Ivent 92.000 49.000 21,000 c. Work in Process Manufao acturing Overhead Salaries and Wages Payable 70,000 d.Manufacturing Overhead 105,000 Accumulated Depreciation 105,000 e. Manufacturing Overhead 130,000 Accounts Payable 130,000 f.Work in Process 458,400 Overhead 458.400 Applied manufacturing overhead 76,400 machine-hours x S6 S458,400 Finished Goods Invent Work in Process 511,000 511,000 h. Cost of Goods Sold 450,000 Finished Goods Invent 450,000 Accounts Receivable 594,000 Sales SalesCost o 594,000 sold x 1.32- S450,000 x 1.32- S594000 The ending balances of manufacturing overhead and work in process accounts should be determined as follows Manufacturing Overhead Work in Process Beg. Bal. 458,400 Beg. Bal34,000 g 511.000 C. d. e. 38,400 21,000 105,000 130,000 153.600 49.000 458,400 End. Bal 164.000 (Overapplied overhead) End. Bal 184.000