Question

Exercise 3-5 Journal Entries and T-accounts (LO3-1, LO3-2] The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $191,000 ($152,800 direct materials and $38,200 indirect materials). c. Accrued direct labor cost of $49,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $105,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,300 machine-hours were used in October, g. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 40% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35,000. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending

Answer 1

Debit Credit No. Transaction General Journal 1 a. I Raw materials - Accounts payable (To record raw materals purchaus $ 210,000 $ 210,000 $ 15 2,800 $ 30,200 Work in process Manufacturing overhead Raw materials (Torecord manufacturing overhead) $ 191,000 3 , $ 49,000 $ 21,000 work in process Manufacturing overhead salaries and wages payable (To recard salaries & wages payable) $ 70,000 $ 105,000 Manufacturing overhead Accumulated depreu'ation (To recard accumulated depreciation) $105,000 e $ 130,000 Manufacturing overhead accounts payable (to record manufacturing overhead) $ 130,000 $ 381,500 work in process Manufacturing overhead (To record manufacturing overhead) $ 381, Soo

$ 512,000 Finished goods work in process (forecand job cost sheets foarferred to hished goods $ 512,000 $ 449,000 hol Cost of goods sold fines hed goods ( To record cost of goods sold) $ 449,000 9. (2) $ 628,600 Accounts receivable Sales (To record sales) $ 628,600 Calculation : () 76,300 X $ 5 pex machine hour = 381,500 h (2) Accounts receivable = $ 449,000 X 40%. = $ 179,600 $ 449,000 + $ 179,600 = $ 628,600 Manufacturing overhead * 38,200 $381,500 1s 21,000 $ 165,000 $ 130,000 work in process Beg. Bal.&35,000 br 152,800 $512,000 g 49,000 $ 381,500 $ 87,300 End. Bal $106, 300