Question

During the current month, Tomlin Company incurs the following manufacturing costs.(a) Purchased raw materials of $16,940 on account.(b) Incurred factory labor of $38,528. Of that amount, $32,281 relates to wages payable and $6,247 relates to payroll taxes payable.(c) Factory utilities of $3,108 are payable, prepaid factory property taxes of $2,008 have expired, and depreciation on the factory building is $8,322.Prepare journal entries for each type of manufacturing cost.

Answer 1

Answer:

raw materials      16,940  debit

   account payable    16,940 credit

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WIP  38,528  debit

 wages payable           32,281 credit

 payroll taxes payable  6,247 credit

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Factory Overhead   13,438 debit

       utilities payable                  3,108 credit

       prepaid property taxes     2,008 credit

      accumulated dep-building 8,322 credit

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Explanation:

(A) as the purchase is on account we use account payable

(B) we declare each payable amount and capitalized through work in process account

(C)this are actual overhead cost so we debit overhead to later compare with the applied overhead (credit) and solve for applied or underapplied overhead.

Also, we credit the payable utilities, decrease the prepaid for the expired amount and increase the accumulated depreciaiton in the facotry building.