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, $84,000. b. Direct materials used in production, $38,000. Indirect materials used in production, $13,500. c. Paid cash for factory payroll, $45,000. Of this total, $31,000 is for direct labor and $14,000 is for indirect labor. d. Paid cash for other actual overhead costs, $7,250. e. Applied overhead at the rate of 120% of direct labor cost. f. Transferred cost of jobs completed to finished goods, $58,500. g1. Jobs that had a cost of $58,500 were sold. g2. Sold jobs on account for $84,000.

Answer 1

Dr Raw materials inventory 84,000

Cr Accounts payable 84,000

Dr Work in process inventory 38,000

Cr Raw materials inventory 38,000

Dr Factory overhead 13,500

Cr Raw materials inventory 13,500

Dr Work in process inventory 31,000

Dr Factory overhead 14,000

Cr Cash 45,000

Dr Factory overhead 7,250

Cr Cash 7,250

Dr Work in process inventory 37.200

Cr Factory overhead 37,200

Dr Finished goods inventory 58,500

Cr Work in process inventory 58,500

Dr Cost of goods sold 58,500

Cr Finished goods inventory 58,500

Dr Accounts receivable 84,000

Cr Sales revenue 84,000