Question

During the current month, Wacholz Company incurs the following manufacturing costs. (a) Purchased raw materials of $17,500 on account. (b) Incurred factory labor of $39,900. Of that amount, $30,800 relates to wages payable and $9,100 relates to payroll taxes payable. (c) Factory utilities of $3,500 are payable, prepaid factory property taxes of $2,770 have expired, and depreciation on the factory building is $9,900.

Answer 1

Answer and Explanation:

The journal entries are shown below:

a. Raw material inventory $17,500

To Account payable $17,500

(Being raw material inventory purchased on account)

b. Factory labor $39,900

To Factory wages payable $30,800

To Employer payroll tax payable $9,100

(Being factory labor is recorded)

c. Factory Overhead $16,170

To Factory Utilities payable $3,500

To Prepaid Factory property taxes $2,770

To Accumulated Depreciation $9,900

(Being Manufacturing costs is recorded)