Question

Larned Corporation recorded the following transactions for the just completed month.

1. $89,000 in raw materials were purchased on account.
2. $87,000 in raw materials were used in production.
3. Of this amount, $76,000 was for direct materials and the remainder was for indirect materials.
4. Total labor wages of $128,500 were paid in cash. Of this amount, $103,000 was for direct labor and the remainder was for indirect labor.
5. Depreciation of $190,000 was incurred on factory equipment.

Required:
Record the above transactions in journal entries.

Answer 1

The journal entries for Larned Corporation's transactions include entries for raw materials purchased, raw materials used in production, labor wages paid, and depreciation on factory equipment, separating direct and indirect costs.

Step-by-step explanation:

Journal Entries for Larned Corporation

Based on the transactions provided for the Larned Corporation, here are the respective journal entries:

1. Raw materials purchased on account:
   
   Dr. Raw Materials $89,000
   
   Cr. Accounts Payable $89,000
2. Raw materials used in production (Direct and Indirect):
   
   Dr. Work in Process (Direct Materials) $76,000
   
   Dr. Factory Overhead (Indirect Materials) $11,000
   
   Cr. Raw Materials $87,000
3. Labor wages paid:
   
   Dr. Work in Process (Direct Labor) $103,000
   
   Dr. Factory Overhead (Indirect Labor) $25,500
   
   Cr. Cash $128,500
4. Depreciation on factory equipment:
   
   Dr. Factory Overhead $190,000
   
   Cr. Accumulated Depreciation - Factory Equipment $190,000

Each journal entry is made to reflect the transactions that have taken place: purchasing materials, the issuance of labor wages, and recording depreciation of equipment, distinguishing between direct and indirect costs.

Answer 2

Answer with its Explanation:

Part 1: $89,000 in raw materials were purchased on account.

The purchase of raw material inventory on account is treated as increase in raw material inventory and accounts payables. The journal entry would be as under:

Dr Raw Material Inventory $89,000

Cr Accounts Payables $89,000

Part 2: $87,000 in raw materials were used in production. Of this amount, $76,000 was for direct materials and the remainder was for indirect materials.

The entry would be increase in work in progress by $76,000 & Manufacturing overhead by $11,000 and would decrease the raw material inventory with $87,000.

The journal entry would be as under:

Dr Work In Progress $76,000

Dr Manufacturing Overhead $11,000

Cr Raw Material Inventory $87,000

Part 3: Total labor wages of $128,500 were paid in cash. Of this amount, $103,000 was for direct labor and the remainder was for indirect labor.

The direct cost are allocated to the work in progress and indirect costs are allocated to manufacturing overheads.

The journal entry would be as under:

Dr Work In Progress $128,500

Dr Manufacturing Overhead $103,000

Cr Cash Account $231,500

Part 4: Depreciation of $190,000 was incurred on factory equipment.

The depreciation of the factory equipment is an indirect cost and all the indirect costs are charged to manufacturing overhead.

The journal entry would be as under:

Dr Manufacturing Overhead $190,000

Cr Cash Account $190,000