Answer:
Forest Components
a. Journal Entries
1. Debit Raw materials $119,000
Credit Accounts payable $119,000
To record purchase of materials on account.
2. Debit Work in Process $117,600
Credit Raw materials $117,600
To record transfer of materials to production.
3. Debit Overhead $8,400
Credit Raw materials $8,400
To record indirect materials used.
4. Debit Accounts payable $119,000
Credit Cash $119,000
To record payment for materials.
5. Debit Raw materials $15,400
Credit Work in Process $15,400
To record the return of materials to warehouse.
6. Debit Work in Process $217,000
Credit Cash $217,000 (direct labor)
To record the payment for direct labor.
7. Debit Overhead $120,400
Credit Account payable $120,400
Purchase of miscellaneous items for manufacturing plant.
8. Debit Overhead $245,000
Credit Depreciation expense $245,000
To record depreciation expense for overhead
9. Debit Work in Process $201,810
Credit Overhead $201,810
To record overhead applied.
b. T-accounts:
Materials Inventory
Account Titles Debit Credit
Beginning balance $79,800
Accounts payable $119,000
Work in Process $117,600
Overhead 8,400
Work in Process 15,400
Ending Balance 88,200
214,200 214,200
Work in Process Inventory
Account Titles Debit Credit
Beginning balance $105,490
Raw materials 117,600
Raw materials $15,400
Direct labor (cash) 217,000
Overhead 201,810
Finished Goods 553,000
Ending Balance 73,500
$641,900 $641,900
Overhead
Account Titles Debit Credit
Raw materials $8,400
Accounts payable 120,400
Depreciation exp. 245,000
Work in Process $201,810
Finished Goods Inventory
Account Titles Debit Credit
Beginning balance $18,200
Work in Process 553,000
Cost of goods sold $521,500
Ending balance $49,700
Cost of Goods Sold
Account Titles Debit Credit
Finished Goods $521,500
Explanation:
a) Data and Analysis:
1. Raw materials $119,000 Accounts payable $119,000
2. Work in Process $117,600 Raw materials $117,600
3. Overhead $8,400 Raw materials $8,400
4. Accounts payable $119,000 Cash $119,000
5. Raw materials $15,400 Work in Process $15,400
6. Work in Process $217,000 Cash $217,000 (direct labor)
7. Overhead $120,400 Account payable $120,400
8. Overhead $245,000 Depreciation expense $245,000
9. Work in Process $201,810 Overhead $201,810 ($217,000 * $0.93)
Estimated direct labor costs = $3,000,000
Estimated overhead costs = $2,790,000
Predetermined overhead rate = $2,790,000/$3,000,000 = $0.93
