Question

ACC 560 Brief Exercise 2-2 During January, its first month of operations, Dieker Company accumulated the following manufacturing costs: raw materials $5,300 on account, factory labor $7,400 of which $5,600 relates to factory wages payable and $1,800 relates to payroll taxes payable, and factory utilities payable $3,100. Prepare separate journal entries for each type of manufacturing cost. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Dieker Company

Journal Entries:

Debit Raw Materials Inventory $5,300

Credit Accounts Payable $5,300

To record the purchase of raw materials on account.

Debit Factory Labor $7,400

Credit Wages payable $5,600

Credit Payroll taxes payable $1,800

To record the cost of factory labor.

Debit Factory Utilities Expenses $3,100

Credit Factory Utilities Payable $3,100

To record the factory utilities expenses for the period.

Step-by-step explanation:

a) Data and Calculations:

Raw materials on account = $5,300

Factory labor:

Factory wages payable = $5,600

Payroll taxes payable = 1,800

Total factory labor costs $7,400

Factory utilities payable = $3,100

b) The journal entries made for each type of manufacturing cost help to record the transactions according to the double-entry system of accounting. They show the accounts that must be debited and the ones that must be credited.