8. value: 192 points Exercise 15-17 Manufacturing cost flows LO P1, P2, P3 Custo

Question

8. value: 192 points Exercise 15-17 Manufacturing cost flows LO P1, P2, P3 Custom Cabinetry has one job in process (Job 120) as of June 30, at that time, its job cost sheet reports direct materials of $6,000, direct labor of $2,800, and applied overhead of $2,240 Custom Cabinetry applies overhead at the rate of $22,000, 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 80% of direct labor cost Dunng July, Job 120 is sold (on account) for July Product Costs Direct materials Fotal $1,000 $6,000 $2,500 $9,500 2,200 3,700 2,100 8,000 Job 120 Job 121 Job 122 Direct labor Overhead applied 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

Explanation / Answer

Transaction

General Journal

Debit

Credit

(a).

Work in process inventory

$9500

      Raw materials inventory

$9500

(For recording assigning direct materials to jobs)

(b).

Work in process inventory

$8000

      Factory wages payable

$8000

(For recording assigning direct labor to job)

(c).

Work in process inventory

$6400

      Factory overhead

$6400

(For recording application of overhead to work in process)

(d).

Accounts receivable

$22000

      Sales

$22000

(For recording sale of job 120 on account)

(e).

Cost of goods sold

$16000

      Finished goods inventory

$16000

(For recording cost of sale of job 120)

Working Note;

Cost of goods sold of Job 120 will be calculated as follow;

($6000 + $2800 + $2240 + $1000 + $2200 + $1760) = $16000

Transaction

General Journal

Debit

Credit

(a).

Work in process inventory

$9500

      Raw materials inventory

$9500

(For recording assigning direct materials to jobs)

(b).

Work in process inventory

$8000

      Factory wages payable

$8000

(For recording assigning direct labor to job)

(c).

Work in process inventory

$6400

      Factory overhead

$6400

(For recording application of overhead to work in process)

(d).

Accounts receivable

$22000

      Sales

$22000

(For recording sale of job 120 on account)

(e).

Cost of goods sold

$16000

      Finished goods inventory

$16000

(For recording cost of sale of job 120)

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