Question

Raw materials purchased on account, $102,000. Direct materials used in production, $42,500. Indirect materials used in production, $15,000. Paid cash for factory payroll, $55,000. Of this total, $37,000 is for direct labor and $18,000 is for indirect labor. Paid cash for other actual overhead costs, $8,375. Applied overhead at the rate of 125% of direct labor cost. Transferred cost of jobs completed to finished goods, $72,600. Sold jobs on account for $104,000. The jobs had a cost of $72,600.

Answer 1

Journal Entries are given below in explanation.

Step-by-step explanation:

Account Dr Cr

1.Raw materials 102000

Account payable-Liability 102000

The Materials are purchased in credit.

2. Work In Process 42500

Direct materials / Raw materials 42500

Entry for Materials used in Production.

3. Factory Overhead 15000

Raw materials 15000

Entry for indirect materials used in production

4. Factory payroll- Salaries 55000

Cash / Bank 55000

Salaries to employees are paid through cash.

5. Direct Labor / Work in Process 37000

Factory Overhead / Indirect labor 18000

Factory Payroll 55000

6. Overhead 8375

Cash / bank 8375

7. Work in process 46250

Applied Overhead 46250

Applied overhead is charged as 125 % of direct labor cost.

8. Finished Goods 72600

Work In Process 72600

Transfer of inventory from Work in process to Finished Goods

9. Accounts Receivable 104000

Sales Revenue 104000

Cost of goods sold 72600

Finished Goods 72600

Entry for selling finished job on account.