Question

[The following information applies to the questions displayed below.] The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system. April 30 May 31 Inventories Raw materials $ 43,000 $ 52,000 Work in process 10,200 21,300 Finished goods 63,000 35,600 Activities and information for May Raw materials purchases (paid with cash) 210,000 Factory payroll (paid with cash) 345,000 Factory overhead Indirect materials 15,000 Indirect labor 80,000 Other overhead costs 120,000 Sales (received in cash) 1,400,000 Predetermined overhead rate based on direct labor cost 70 % Direct labor usage. Indirect labor usage. Total payroll paid in cash. Prepare journal entries for the above transactions for the month of May.

Answer 1

raw materials 210,000 debit

cash 210,000 credit

-- to record purchase of materials--

factory overhead 80,000 debit

WIP inventory 265,000 debit

cash 345,000 credit

-- to record payment and allocationf of wages --

factory overhead 15,000 debit

WIP inventory 186,000 debit

inventory 201,000 credit

--to record use and allocationf of materials--

factory overhead 120,000 debit

accoutns payable 120,000 credit

-- to record other overhead expenses--

WIP 185,500 debit

factory overhead 185,500 credit

--to record applied overhead--

finished goods 625,400 debit

WIP 625,400 credit

--to record trasnferred-out goods--

cash 1,400,000 debit

sales revenue 1,400,000 credit

--to record sales revenue--

COGS 652,800‬ debit

inventory 652,800 credit

--to record COGS for the period--

COGS 14,500 debit

factory overhead 14,500 credit

--to record underapplied overhead--

Step-by-step explanation:

for the use of materials:

Beginning Raw Materials 43,000

Purchases 210,000

Ending Raw materials (52,000)

Used: 201,000

Indirect materials (15,000)

direct materials: 186,000

applied overhead

265,000 direct labor x 70% = 185,500

transferred out:

Beginning WIP 10,200

cost added 636,500

total cost 646,700

ending WIP (21,300)

COGM 625,400

COGS

63,000 + 625,400 - 35,600 =652.800‬

adjusmtent for overhead:

applied 185,500

actual overhead: 200,000

underapplied for 14,500