Question

Raw materials $ 24,000 Work-in-Process 73,000 Finished goods 27,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 45,000 machine-hours and incur $180,000 in manufacturing overhead cost. The following transactions were recorded for the year:

A. Raw materials purchased, $416,000.
B. Raw materials were requisitioned for use in production, $420,000 ($380,000 direct and $40,000 indirect).
C. The following employee costs were incurred: direct labor, $414,000; indirect labor, $60,000; and admin. salaries, $212,000.
D. Selling costs, $141,000.
E. Factory utility costs, $20,000.
F. Depreciation for thw year was $81,000 of which $73,000 is related to factory operations and $8,000 is related to selling, general, and admin. activities.
G. manufacturing overhead was applied to jobs. The actual level of activity for the year was $48,000 machine hours.
H. the cost of goods manufactured for the year was $1,004,00.
I. sales for the year totaled $1,416,000 and the costs on the job cost sheets of the goods that were sold totaled $989,000.
J. The balance in the manufacturing overhead account was closed out to cost of goods sold.
Required:
Prepare the appropriate journal entry for each of the items above (a. through j). You can assume that all transactions with employees, customers, and suppliers, were conducted in cash.

Answer 1

General Journal

Sr. No Particulars Debit Credit

A. Materials Inventory $416,000

Cash $416,000

A. Raw materials purchased, $416,000.As cash is used cash is credited.

B. Work In Process $380,00

Manufacturing Overheads $40,000

Materials Inventory $ 420,000

B. Raw materials were requisitioned for use in production, $420,000 ($380,000 direct and $40,000 indirect).

C. Work in Process $ 414,000

Manufacturing Overhead $ 60,000

Admin & Sales Salaries $ 212000

Factory Overhead Control $686,000 Cr

C. The following employee costs were incurred: direct labor, $414,000; indirect labor, $60,000; and admin. salaries, $212,000.

D. Selling Expenses $141,000

Factory Overhead Control $141,000

D. Selling costs, $141,000.

E. Manufacturing Overheads $ 20,000

Factory Overhead Control $ 20,000

E. Factory utility costs, $20,000.

F. Dep. Mfg Overheads $ 81000

Dep. Selling & Admin $ 73000

Factory Overhead Control $ 154,000

F. Depreciation for the year was $81,000 of which $73,000 is related to factory operations and $8,000 is related to selling, general, and admin. activities.

G. Work in Process $ 180,000

Applied Factory Overhead $ 180,000

G. manufacturing overhead was applied to jobs. The actual level of activity for the year was 48,000 machine hours.

Applied Factory Overhead $ 180,000

Factory Overhead Control $ 180,000

H. Finished Goods $1,004,00

Work in Process $1,004,00.

H. the cost of goods manufactured for the year was $1,004,00.

I. Cost of Goods Sold $989,000

Finished Goods $989,000

I. sales for the year totaled $1,416,000 and the costs on the job cost sheets of the goods that were sold totaled $989,000.

I. Cash $1,416,000Dr

Sales $1,416,000 Cr

J. Under applied Overhead $ 12,000

Factory Overhead Control $ 12000Cr

( Actual Hours 48,000) ($ 180,000/45000)*48000= $ 192,000

$ 180,000 has already been posted but it is under applied as actual is

$ 192,000 so the remaining $ 12000 is also posted.

Cost of Goods Sold $ 120,000

Manufacturing Overheads $ 120,000

(B+C+E= 60,000 + 40,000 + 20,000= 120,000)The balance in the manufacturing overhead account was closed out to cost of goods sold.