Question

Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $8,000 of indirect materials and $12,400 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:
Job 301

Direct materials $10,000
Direct labor 8,000
Factory overhead 6,000
Tota l$24,000
Job 302Direct materials $20,000

Direct labor 17,000
Factory overhead 12,750
Total $49,750
Job 303
Direct materials $24,000
Direct labor 18,000
Factory overhead
—Job 304
Direct materials $14,000
Direct labor 12,000
Factory overhead
—

Required:

Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles.
A. Direct and indirect materials used.
B. Direct and indirect labor used.
C. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).
D. Completion of Jobs 301 and 302

Answer 1

Answer:

WIP inventory       68,000 debit

Factory Overhead   8000 debit

     Raw Materials Inventory   76,000 credit

WIP inventory         55.000 debit

Factory Overhead  12,400 debit

  Factory Payroll payable       77,400 credit

WIP inventory       31,250 debit

   Factory overhead      31,250 credit

Finished Goods Inventory 73,750 debit

           WIP inventory              73,750 credit

Explanation:

Direct Materials used:

10,000 + 20,000 + 24,000 + 14,000 = 68,000

Direct Labor used:

8,000 + 17,000 + 18,000 + 12,000 = 55,000

Overhead Applied:

6,000 + 12,750 + 13,500 + 9,000 = 31,250

Overhead rate:

6,000 /  8,000 =  0.75

12,750 / 17,000 =  0.75

Finished goods:

24,000 + 49,750 = 73,750