Question

1. Prepare a journal entry showing the transfer of Job 102 into Finished Goods Inventory upon its completion. 2. Prepare the journal entries to recognize the sales revenue and cost of goods sold for Job 101. 3. Prepare the journal entry to transfer the balance of the Manufacturing Overhead account to Cost of Goods Sold.

Answer 1

Answer and Explanation:

Before recording the journal entries first we need to do the computations which are shown below:

The predetermined overhead rate is

= $420,000 ÷ 60,000 machine hours

= $7 per machine hour

Now

Particulars Job 101 Job 102 Job 103 Total

Direct materials used 19,200 14,400 9,600 43,200

Direct labor 28,800 11,200 9,600 49,600

overhead applied 7000 28000 14000 49000

total 55,000 53,600 33,200 141,800

COGS Finished WIP

Now the journal entries are as follows

1 Finished goods inventory $53,600

To Work in process inventory $53,600

(Being the transfer of job 102 is recorded)

2a) Cost of goods sold $55,000

To Finished goods inventory $55,000

(being the cost of goods sold is recorded)

2b) Cash $60,000

To sales revenue $60,000

(being the sales revenue is recorded)

3) Manufacturing overhead $4,000 ($49,000 - $45,000)

To Cost of goods sold $4,000

(Being the balance of the manufacturing overhead is recorded)