Question

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, $189,000 ($151,200 direct materials and $37,800 indirect materials) c. Accrued direct labor cost of $49,000 and indirect labor cost of $20,000 d. Depreciation recorded on factory equipment, $106,000 e. Other manufacturing overhead costs accrued during October, $130,000 f. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 76,400 machine-hours were used in October g. Jobs costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods h. Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These Jobs were sold on account at 34% above cost. Required: 1. Prepare journal entries to record the transactions given above

Answer 1

Answer:

a.) Raw material 210000

          Account payable     210000

(Purchase material on account)

b.) 1.Work in process  151200

             Raw material       151200

       (material used)

    2.Overhead          37800

              Raw material        37800

     (Record indirect material )

c.)1. Work in process     49000

              Factory payroll        49000

     (Record direct labor)

     2. Overhead           20000

              Factory payroll        20000

       (Record indirect labor)

       

d.)  Overhead      106000

          Accumulated depreciation   106000

          (record depreciation)

e.)  Overhead     130000

               Account Payable    130000

f.)  work in process  (8*76400)  611200

              Overhead                               611200

g.) Finished goods 511000

                   Work in process   511000

  ( record completion of goods from wip to finished goods)

h.)Account receivable  605680

                 Sales                       6056800

      (record sales on account)

Explanation:

f.Overhead applied to a particular job= Predetermined rate* job hours allocated

h. copmlete job were shipped to customer at 34% above cost =(452000*34%)=452000+153680=605680.