Schmeltz Industries organized in January and recorded the following transactions during its first month of operations:
Jan. 5 | Purchased materials on account for $800,000. |
Jan. 9 | Used materials costing $450,000 on job no. 1001 |
Jan. 14 | Used materials costing $200,000 on job no. 1002 |
Jan. 18 | Used materials costing $100,000 on job no. 1003 |
Jan. 25 | Applied the following direct labor costs to jobs: job no. 1001, $3,600: job no. 1002, $5,400; job no. 1003, $1,350. (Direct labor workers earn $18 per hour.) |
Jan. 27 | Applied manufacturing overhead to all jobs at a rate of $450 per direct labor hour. |
Jan. 28 | Completed and transferred job no. 1001 and job no. 1002 to the finished goods warehouse. |
Jan. 29 | Sold job no. 1001 on account for $725,000. |
Jan. 31 | Recorded and paid actual January manufacturing overhead costs of $250,000, cash. |
Jan. 31 | Closed the Manufacturing Overhead account directly to Cost of Goods Sold. |
a.Prepare journal entries for each of the above transactions.
b.Compute the balance of the Cost of Goods Sold account at January 31.
c.Determine the company’s inventor}’ balances at January 31.
d.Was manufacturing overhead in January overapplied. or was it underapplied? Explain.
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