Question

Prepare summary journal entries to record the following transactions for a company in its first month of operations.a. Raw materials purchased on account, $90,000.b. Direct materials used in production, $36,500. Indirect materials used in production, $19,200.c. Paid cash for factory payroll, $50,000. Of this total, $38,000 is for direct labor and $12,000 is for indirect labor.d. Paid cash for other actual overhead costs, $11,475.e. Applied overhead at the rate of 125% of direct labor cost.f. Transferred cost of jobs completed to finished goods, $56,800.g. Sold jobs on account for $82,000. The jobs had a cost of $56,800.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

a. Raw materials inventory A/c Dr $90,000

To Accounts payable A/c $90,000

(Being raw material is purchased on credit)

b. Work in progress inventory A/c Dr $36,500

To Raw materials inventory A/c $36,500

(Being used in production recorded)

Factory overhead A/c Dr $19,200

To Raw materials inventory A/c $19,200

(Being indirect material used is recorded)

c. Work in progress inventory A/c Dr $38,000

Factory overhead A/c Dr $12,000

To cash A/c $50,000

(Being factory payroll is paid in cash)

d. Factory overhead A/c Dr $11,475

To Cash A/c $11,475

(Being other actual overhead is paid for cash)

e. Work in progress inventory A/c Dr $47,500 ($38,000 × 125%)

To Factory overhead A/c $47,500

(Being applied overhead is recorded)

f. Finished goods inventory A/c Dr $56,800

To Work in progress inventory A/c $56,800

(Being transferred goods are recorded)

g. Accounts receivable A/c Dr $82,000

To Sales A/c $82,000

(Being jobs are sold on account)

Cost of goods sold A/c Dr $56,800

To Finished goods inventory A/c $56,800

(Being the job cost is recorded)