Question

Item1 5 points eBookPrintReferencesCheck my workCheck My Work button is now enabled2Item 1 Problem 2-26A Journal Entries; T-Accounts; Financial Statements [LO2-1, LO2-2, LO2-3, LO2-4, LO2-5, LO2-6, LO2-7] Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $378,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account): a. Raw materials purchased for use in production, $285,000. b. Raw materials requisitioned for use in production (all direct materials), $270,000. c. Utility bills were incurred, $76,000 (85% related to factory operations, and the remainder related to selling and administrative activities). d. Salary and wage costs were incurred:

Answer 1

journal entries:

raw materials 285,000 debit

Account Payable 285,000 credit

--to record purchase of materials--

Work in Process Inventory 270,000 debit

Raw Materials 270,000 credit

--to record use of direct materials--

Factory overhead 64,600 debit

Utilities Expense 11,400 debit

Utilities Payable 76,000 credit

--to record incurred utilities in plant and non-manufacturing departments--

Step-by-step explanation:

We record the journal entries considering that debit = credit

(a) as the business didn't pay cash we use account payable account

(b) we transfer the used amount of materials into WIP inventory

(c) we calculate the proportional use for factory and non-manufacturing departments

76,000 x 85% = 64,600

76,000 x 15% = 11,400