Question

1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101. 3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold.

Answer 1

Answer and Explanation:

Before recording the journal entries first we need to do the computations which are shown below:

The predetermined overhead rate is

= $420,000 ÷ 60,000 machine hours    

= $7 per machine hour  

Now

Particulars                       Job 101   Job 102    Job 103   Total  

Direct materials used     19,200      14,400      9,600     43,200  

Direct labor                     28,800    11,200        9,600     49,600  

overhead applied           7000        28000      14000     49000  

total                                  55,000     53,600     33,200   141,800  

                                        COGS   Finished WIP

Now the journal entries are as follows

1 Finished goods inventory  $53,600  

      To Work in process inventory   $53,600

(Being the transfer of job 102 is recorded)

2a) Cost of goods sold  $55,000  

             To Finished goods inventory $55,000

(being the cost of goods sold is recorded)  

2b) Cash $60,000  

             To sales revenue $60,000

(being the sales revenue is recorded)  

3) Manufacturing overhead $4,000  ($49,000 - $45,000)

                   To Cost of goods sold $4,000

(Being the balance of the manufacturing overhead is recorded)