Question

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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 %
1. Raw materials purchases for cash.
2. Direct materials usage.
3. Indirect materials usage.
Prepare journal entries for the above transactions for the month of May.

Answer 1

A. Dr Raw meat Inventory 120,000

Cr Cash 120,000

B. Dr Indirect Materials $186,000

Cr Raw Materials $186,000

C. Dr Direct Materials $15,000

Cr Raw Materials $15,000

Step-by-step explanation:

Preparation for the journal entries for the above transactions for the month of May.

Dr Raw meat Inventory 120,000

Cr Cash 120,000

(Being to record Raw materials purchases for cash)

B. Dr Indirect Materials $186,000

Cr Raw Materials $186,000

($201,000 - 15,000)

C. Dr Direct Materials $15,000

Cr Raw Materials $15,000