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