Question

The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.

Raw materials purchased on account $210,000.
Raw materials used to production, $190,000 ($178,000 direct materials amd $12,000 indirect materials).
Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,00.
Depreciation recorded on factory equipmentnt, $40,000.
Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable).
The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.
Production orders costing $520,00 according to their job cost sheets were completed during October and transferred to Finished Goods.
Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.

Required: 1. Prepare journal entries to record the information given above.

Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information about to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.

Answer 1

Requirement 1

J1

Raw materials $210,000 (debit)

Trade Payable $210,000 (credit)

J2

Work -In- Progress - Direct materials $178,000 (debit)

Work -In- Progress - Indirect materials $12,000 (debit)

Raw materials $190,000

J2

Work -In- Progress - Direct labor $90,000 (debit)

Work -In- Progress - Indirect labor $110,000 (debit)

Wages and Salaries Payable $200,000(credit)

J4

Work -In- Progress - Depreciation $40,000 (debit)

Accumulated Depreciation - factory equipment $40,000 (credit)

J5

Overheads $70,000 (debit)

Payable $70,000 (credit)

J6

Work -In- Progress $240,000 (debit)

Overheads $240,000 (credit)

J7

Finished Goods $520,000 (debit)

Work - In - Progress $520,000 (credit)

Requirement 2

Manufacturing Overhead Account

Debit :

Payable $70,000

Under-Applied Overheads $170,000

Credit:

Work-in-Progress $240,000

Work in Process Account

Debit :

Work in Process Beginning $42,000

Raw materials $190,000

Wages and Salaries Payable $200,000

Accumulated Depreciation - factory equipment $40,000

Credit:

Finished Goods $520,000

Work in Process Ending $42,000

Step-by-step explanation:

Prepare the journals as appropriate.