Answer:
Custom Cabinetry
1. Journal Entries:
a. Debit Work in Process:
Job 120 $2,600
Job 121 $8,300
Job 122 $4,100
Credit Direct materials $15,000
To record the direct materials used in production in July.
b. Debit Work in Process:
Job 120 $3,200
Job 121 $4,500
Job 122 $3,600
Credit Payroll $11,300
To record the cost of direct labor for July.
c. Debit Work in Process:
Job 120 $2,720
Job 121 $ 3,825
Job 122 $3,060
Credit Overhead applied $9,605
To apply overhead at the rate of 85% of direct labor costs.
d. Debit Accounts Receivable $29,500
Credit Sales Revenue $29,500
To record the sale of Job 120 on account.
e. Debit Cost of goods sold $24,920
Credit Finished Goods: Job 120 $24,920
To record the cost of Job 120 sold.
2. July 31 Balances:
Work in Process Inventory = $10,760
Finished Goods Inventory $16,625
Explanation:
a) Data and Calculations:
Overhead application rate = 85% of direct labor cost
Sales price of Job 120 = $29,500
Job 120 Job 121 Job 122 Total
Beginning inventory:
Direct materials $8,700 $8,700
Direct labor 4,200 4,200
Applied overhead 3,570 3,570
Total $16,400 $16,400
Costs incurred during July:
Total Direct materials $2,600 $8,300 $4,100 $15,000
Direct labor 3,200 4,500 3,600 11,300
Overhead applied ? ? ? ?
Cost of production:
Job 120 Job 121 Job 122 Total
Beginning inventory:
Direct materials $8,700 $8,700
Direct labor 4,200 4,200
Applied overhead 3,570 3,570
Total $16,400 $16,400
Costs incurred during July:
Total Direct materials $2,600 $8,300 $4,100 $15,000
Direct labor 3,200 4,500 3,600 11,300
Overhead applied 2,720 3,825 3,060 9,605
Total production costs $24,920 $16,625 $10,760 $52,305
Sold Completed In Process
