Question

EA12.

LO 4.7During the month, Job AB2 used specialized machinery for 450 hours and incurred $500 in utilities on account, $300 in factory depreciation expense, and $100 in property tax on the factory. Prepare journal entries for the following:

Record the expenses incurred.
Record the allocation of overhead at the predetermined rate of $1.50 per machine hour.

Answer 1

The Journal entries are as follows:

(i) Manufacturing Overheads Account Dr. $900

To Accumulated Depreciation $300

To Cash account $100

To Utilities payable $500

(To record the expenses incurred)

(ii) Work in process inventory A/c ($1.50 × 450) Dr. $675

To Manufacturing Overhead $675

(To record the allocation of overhead at the predetermined rate of $1.50 per machine hour)