Question

Journal Entries, T-Accounts

Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred: Materials were purchased on account for $45,760. Materials totaling $40,880 were requisitioned for use in producing various jobs. Direct labor payroll for the month was $19,200 with an average wage of $12 per hour. Actual overhead of $8,860 was incurred and paid in cash. Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour. Completed jobs costing $59,000 were transferred to Finished Goods. Jobs costing $58,000 were sold on account for $ 73,750. Make the entry to record the revenue from the sale first, followed by the entry to record the cost of the jobs. Beginning balances as of July 1 were:
Materials Inventory $1,200
Work-in-Process Inventory 3,400
Finished Goods Inventory 2,640
Required:
1. Prepare the journal entries for the preceding events.
a.
b.
c.
d.
e.
f.
g (1).
g (2).
2. Calculate the ending balances of:
a. Materials Inventory $
b. Work-in-Process Inventory $
c. Overhead Control $
d. Finished Goods Inventory $

Answer 1

1. Journal Entries

S/n Account Title Debit Credit

a Raw materials inventory $45,760

Accounts payable $45,760

b Work in process inventory $40,880

Raw materials inventory $40,980

c Work in process inventory $19,200

Wages payable $19,200

d Manufacturing overhead $8,860

Cash $8,860

e Work in process inventory $7,406

(19,200 /14*5.40)

Manufacturing overhead $7,406

f Finished goods inventory $59,000

Work in process inventory $59,000

g1) Accounts receivable $73,750

Sales $73,750

g2) Cost of goods sold $58,000

Finished goods inventory $58,000

2. Ending balances

a. Materials Inventory = $ 1,200 + 45,760 - $40,880 = $6,080

b. Work-in-Process Inventory = $ 3,400 + $40,880 + $19,200 + $7,406 - $59,000 = $11,886

c. Overhead Control = $ 8,860 - $7,406 = $1,454

d. Finished Goods Inventory = $2,640 + $59,000 - $58,000 = $3,640