Question

The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.
April 30 May 31
Inventories
Raw materials $ 43,000 $ 52,000
Work in process 10,200 21,300
Finished goods 63,000 35,600
Activities and information for May
Raw materials purchases (paid with cash) 210,000
Factory payroll (paid with cash) 345,000
Factory overhead
Indirect materials 15,000
Indirect labor 80,000
Other overhead costs 120,000
Sales (received in cash) 1,400,000
Predetermined overhead rate based on direct labor cost 70 %
rev: 06_09_2015_QC_CS-17114

Exercise 15-8 Journal entries for materials LO P1

1. Raw materials purchases for cash.
2. Direct materials usage.
3. Indirect materials usage.


Exercise 15-9 Journal entries for labor LO P2

1. Direct labor usage.
2. Indirect labor usage.
3. Total payroll paid in cash.
Prepare journal entries for the above transactions for the month of May.

Transaction General Journal Debit Credit
1

Answer 1

Answer:

Exercise 15-8

1. Raw materials purchases for cash.

Raw Materials $210,000 (debit)

Cash $210,000 (credit)

2. Direct materials usage.

Work In Process : Indirect Materials $186,000 (debit)

Raw Materials $186,000 (credit)

3. Indirect materials usage.

Work In Process : Direct Materials $15,000 (debit)

Raw Materials $15,000 (credit)

Exercise 15-9

1. Direct labor usage.

Work In Process : Direct Labor $265,000 (debit)

Salaries and Wages Payable $265,000 (credit)

2. Indirect labor usage.

Work In Process : Indirect Labor $80,000 (debit)

Salaries and Wages Payable $80,000 (credit)

3. Total payroll paid in cash.

Salaries and Wages Payable :  $345,000 (debit)

Cash  $345,000 (credit)

Explanation:

Raw Materials - T Account (To determine the Materials Transferred to Production)

Debit

Opening Balance                                                 $ 43,000

Add Purchases                                                    $210,000

Totals                                                                   $253,000

Credit

Closing Balance                                                   $ 52,000

Transferred to Production (Balancing figure)    $201,000

Totals                                                                   $253,000

Thus, Direct Materials = $201,000 - 15,000 = $186,000