Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October:

a. Raw materials purchased on account, $210,000.
b. Raw materials used in production, $191,000 ($152,800 direct materials and $38,200 indirect materials).
c. Accrued direct labor cost of $49,000 and indirect labor cost of $21,000.
d. Depreciation recorded on factory equipment, $104,000.
e. Other manufacturing overhead costs accrued during October, $129,000.
f. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,100 machine-hours were used in October.
g. Jobs costing $513,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Jobs that had cost $450,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 32% above cost.

Required:
a. Prepare journal entries to record the transactions given above.
b. Prepare T-accounts for Manufacturing Overhead and Work in Process.

Answer 1

Journal entries are given below

Step-by-step explanation:

We should always record the assets and expenses on the debit side of the account and liabilities and capital on the credit side of the account.

a. Raw materials purchased

Account DEBIT CREDIT

Raw material 210,000

Payables 210,000

b. Raw materials used in production

Account DEBIT CREDIT

Work in process inventory 152,800

Manufacturing Overhead 38,200

Raw material 191,000

c. Accrued direct labor cost

Account DEBIT CREDIT

Work in process 49,000

Manufacturing Overhead 21,000

Wages payable 70,000

d. Depreciation recorded on factory equipment

Account DEBIT CREDIT

Depreciation 104,000

Accumulated depreciation 104,000

e. Other manufacturing overhead

Account DEBIT CREDIT

Manufacturing Overhead 129,000

Account payable 129,000

f. The company applies manufacturing overhead cost to production

Account DEBIT CREDIT

Work in process inventory 532,700

(76,100 x $7)

Manufacturing Overhead 532.700

g. Job cost sheets were completed

Account DEBIT CREDIT

Finished goods inventory 513,000

Work in process inventory 513,00

h. Job cost sheets were shipped to customers

Account DEBIT CREDIT

Cost of goods sold 450,000

Finished goods inventory 450,000