Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, i

Question

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,500 direct labor of $3,600, and applied overhead of $2,880. Custom Cabinetry applies overhead at the rate of 80% of direct labor cost. During July, Job 120 is sold (on account) for $28,500, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July July Product Costs Job 120 Job 121 Job 122 Total Direct materials Direct labor Overhead applied $1,800 8,700 3,800 $14,300 9,900 2,300 4,500 3,100 1. Prepare journal entries for the following in July a. Direct materials used in production b. Direct labor used in production c. Overhead applied d. The sale of Job 120 e. Cost of goods sold for Job 120 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Explanation / Answer

Job sheet job 120 job121 job122 Total Beginning bal Direct materials 7,500 7,500 Direct labor 3,600 3,600 applied overhead 2,880 2,880 Total beginning bal 13,980 13,980 cost added during the year Direct materials 1,800 8,700 3,800 14,300 Direct labor 2,300 4,500 3,100 9,900 applied overhead 1840 3600 2480 7920 total cost added during the year 5,940 16800 9380 32,120 total cost of job 19,920 16800 9380 46,100 1) Journal entries No.                General Journal                       Debit Credit a. Work in process inventory 14,300 Raw materials inventory 14,300 b. Work in process inventory 9,900 factory wages payable 9,900 c. work in process inventory 7,920 Manufacturing overhead 7,920 d. Account receivable 28,500 Sales 28,500 e. Cost of goods sold 19,920 Finished goods inventory 19,920 2) Work in process inventory Beg bal 13,980 Finished 36,720 a. 14,300 goods b. 9,900 c. 7,920 End bal 9,380 Finished goods inventory Beg.bal 0 COGS 19,920 WIP 36,720 End bal 16,800 wip finished Job# 122 121 Direct materials 3,800 8,700 direct labor 3,100 4,500 overhead 2480 3600 total 9,380 16,800

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