Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials purchased on account, $210,000. Raw materials used in production, $190,000 ($178,000 direct materials and $12,000 indirect materials). Accrued direct labor cost of $90,000 and indirect labor cost of $110,000. Depreciation recorded on factory equipment, $40,000. Other manufacturing overhead costs accrued during October, $70,000. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% 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 $42,000.

Answer 1

Answer:

1. Prepare journal entries to record the transactions given above

2. Prepare T-accounts for Manufacturing Overhead and Work in Process.

Explanation:

1      

Debit Raw Material 210.000    

Credit  Account Payable  210.000    

raw materials purchased on account, $210,000      

2      

Debit Work in process                 178.000    

Debit manufacturing overhead 12.000    

Credit Raw material                       190.000    

Raw materials used in production, $190,000 ($178,000 direct materials and $12,000 indirect materials)      

3      

Debit Work in process               90000    

Debit manufacturing overhead 110000    

Credit Sales ans wages salaries          200000    

Accrued direct labor cost of $90,000 and indirect labor cost of $110,000.      

4      

Debit manufacturing overhead 40000    

Credit Acummulate depreciation  40000    

Depreciation recorded on factory equipment, $40,000.      

5      

Debit manufacturing overhead 70000    

Credit  Account Payable                 70000    

Other manufacturing overhead costs accrued during October, $70,000.      

6      

Debit Work in process 240000    

Credit manufacturing overhead  240000    

The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October      

7      

Debit Finished goods 520000    

Credit Work in process  520000    

Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods      

8      

Debit Cost of goods 480000    

Credit Finished Goods  480000    

Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month.      

9      

Debit Account receivable 600000    

Credit Sales                                          600000    

These jobs were sold on account at 25% above cost.  

Manufacturing Overhead    

Debit Credit  

2 12.000 240000 6

3 110000  

4 40000  

5 70000  

232.000 240.000  

Ending Balance  8.000  

   

Work in process    

Begining Balance 42000  

2 178.000 520000 7

3 90000  

6 459000  

769.000 520.000  

Ending Balance 249.000