Question Continuation
Make journal entries for each type of manufacturing cost.
Answer:
a. Purchased raw materials of $17,100 on account
Accounts --------- Debit (DR) ------- Credit (CR)
Raw Material-------- $17,100 DR
Accounts Payable ----------------- $17,100 CR
b. Incurred factory labor of $39,300. Of that amount, $31,900 relates to wages payable and $7,400 relates to payroll taxes payable.
Accounts --------- Debit (DR) ------- Credit (CR)
Inventory for Work in Process ---- $31,900 DR
Wages Payable ---------- $31,900 CR
Payroll Tax Payable ------- $7,400
c. Factory utilities of $3,700 are payable, prepaid factory property taxes of $2,860 have expired, and depreciation on the factory building is $8,900
Accounts --------- Debit (DR) ------- Credit (CR)
Utilities expenses ----$3,700 DR
Accounts payable ---$3,700 CR
Property taxes ---- $2,860DR
Prepaid expenses --- $2,860CR
Depreciation expense---- $8,900 DR
Accumulated depreciation -----$8,900CR
Footnote:
A Company's Raw Materials are materials purchased that have not been used in the production process (i.e. they have not been transformed into finished goods).
