Answer:
<u>Journal Entries</u>
<u />
Raw Materials $108,000 (debit)
Accounts Payable $108,000 (credit)
<em>Being purchase of Raw Materials on Account</em>
<em />
Work In Process ; Direct Material Cost $44,000 (debit)
Work In Process ; Indirect Material Cost $19,800 (debit)
Raw Materials $63,800 (credit)
<em>Being Raw Materials requisitioned for Production</em>
<em />
Work In Process ; Direct Wages and Salaries $46,000 (debit)
Work In Process ; Indirect Wages and Salaries $24,000 (debit)
Cash $70,000 (credit)
<em>Being Wages and Salaries Paid in Cash</em>
<em />
Overheads $8,750 (debit)
Cash $8,750 (credit)
<em>Being Cash paid for Overheads</em>
<em />
Work In Process $55,200 (debit)
Overheads $55,200 (credit)
<em>Being Overheads Applied to Work In Process at 120% of direct labor cost</em>
<em />
Finished Goods $86,000 (debit)
Work In Process $86,000 (credit)
<em>Being Goods transferred to Finished Goods</em>
<em />
Trade Receivable $123,000 (debit)
Revenue $123,000 (credit)
<em>Being Sale of Jobs on Account</em>
<em />
Cost of Sales $86,000 (debit)
Finished Goods $86,000 (credit)
<em>Being Cost of Jobs Sold</em>
Explanation:
Costs incurred for Manufacturing are accumulated In the <em>Work In Process Account.</em>
This account is de-recognized as the goods are transferred to <em>Finished Goods.</em>
The Finished Goods Inventory Account is then de-recognised as the Jobs are sold to the Customers.
