Question

Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,510 and two jobs in process: Job No. 429 $2,150, and Job No. 430 $1,360. During May, a summary of source documents reveals the following. Job Number Materials Requisition Slips Labor Time Tickets 429 $2,970 $2,100 430 4,100 3,200 431 4,540 $11,610 8,100 $13,400 General use 900 1,590 $12,510 $14,990 Stine Company applies manufacturing overhead to jobs at an overhead rate of 68% of direct labor cost. Job No. 429 is completed during the month. (a) Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Preparation of   journal entries

Stine Company Journal entries

1. May 31

Dr Work in process inventory $11,610

Dr Manufacturing overhead $900

Cr Raw materials inventory  $12,510

(To record requisition slips)

2.  May 31

Dr Work in process inventory $13,400

Dr Manufacturing overhead $1,590

Cr Factory labor  $14,990

(To record the time tickets)

3. May 31

Dr Work in process $9,112

($13,400*68%)  

Cr Manufacturing overhead  $9,112

(To record assignment of manufacturing overhead to jobs)

4. May 31

Dr  Finished goods inventory $8,648

Cr Work in process inventory  $8,648

[( $2,150+$2,970+$2,100+($2100*68%)]

(To record the completion of Job No. 429)

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