Question

[The following information applies to the questions displayed below.] 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 % Direct labor usage. Indirect labor usage. Total payroll paid in cash. Prepare journal entries for the above transactions for the month of May.

Answer 1

Answer:

raw materials   210,000 debit

       cash                            210,000 credit

-- to record purchase of materials--

factory overhead  80,000 debit

WIP inventory      265,000 debit

           cash                                   345,000 credit

-- to record payment and allocationf of wages --

factory overhead  15,000 debit

WIP inventory      186,000 debit

           inventory                 201,000 credit

--to record use and allocationf of materials--

factory overhead   120,000 debit

     accoutns payable        120,000 credit

-- to record other overhead expenses--

WIP           185,500 debit

       factory overhead   185,500 credit

--to record applied overhead--

finished goods 625,400 debit

     WIP                             625,400 credit

--to record trasnferred-out goods--

cash          1,400,000 debit

       sales revenue        1,400,000 credit

--to record sales revenue--

COGS              652,800‬ debit

  inventory                   652,800 credit

--to record COGS for the period--

COGS      14,500 debit

  factory overhead      14,500 credit

--to record underapplied overhead--

Explanation:

for the use of materials:

Beginning Raw Materials 43,000

Purchases                       210,000

Ending Raw materials        (52,000)

Used:                              201,000

Indirect materials                 (15,000)

direct materials:                   186,000

applied overhead

265,000 direct labor x 70% = 185,500

transferred out:

Beginning WIP 10,200

cost added     636,500

total cost      646,700

ending WIP        (21,300)

COGM              625,400

COGS

63,000 + 625,400 - 35,600 =652.800‬

adjusmtent for overhead:

applied 185,500

actual overhead: 200,000

underapplied for 14,500