Southworth Company uses a job-order costing system and applies manufacturing ove
ID: 2352599 • Letter: S
Question
Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $251,200 of manufacturing overhead for an estimated allocation base of $157,000 direct material dollars.
The following transactions took place during the year (all purchases and services were acquired on account):
a. Raw materials purchased, $146,000.
b. Raw materials requisitioned for use in production (all direct materials), $147,000.
c. Utility bills incurred in the factory, $23,000.
d. Costs for salaries and wages were incurred as follows:
Direct labor $ 215,000
Indirect labor $ 107,800
Selling and administrative salaries $ 143,000
e. Maintenance costs incurred in the factory, $21,000.
f. Advertising costs incurred, $124,000.
g.
Depreciation recorded for the year, $46,000 (70% relates to factory assets, and the remainder relates to selling and administrative assets).
h.
Rental cost incurred on buildings, $80,000 (70% of the space is occupied by the factory, and 30% is occupied by sales and administration).
i. Miscellaneous selling and administrative costs incurred, $12,000.
j. Manufacturing overhead cost was applied to jobs, $ ?
k.
Cost of goods manufactured for the year, $552,000.
l.
Sales for the year (all on account) totaled $1,400,000. These goods cost $520,000 according to their job cost sheets.
The balances in the inventory accounts at the beginning of the year were as follows:
Raw materials $ 22,000
Work in process $ 27,000
Finished Goods $ 31,000
Required:
1. Prepare journal entries to record the above data. (Omit the "$" sign in your response.)
2.
Post your entries to T-accounts. (Don
Explanation / Answer
Debit Credit a. Raw Materials Inventory 142,000 Accounts Payable 142,000 To record purchase of direct materials b. Work In Process Inventory, Job #???? 150,000 Raw Materials Inventory 150,000 To record materials requisitions c. Manufacturing Overhead 21,000 Accounts Payable 21,000 To record factory utilities d. Work-in-Process Inventory, Jobs #???? 216,000 Manufacturing Overhead 90,000 Selling and Administrative Salaries Expense 145,000 Wages and Salaries Payable 451,000 To record payroll e. Manufacturing Overhead 15,000 Accounts Payable 15,000 To record factory maintenance f. Advertising Expense 130,000 Accounts Payable 130,000 To record advertising expense incurred g. Manufacturing Overhead 45,000 Depreciation Expense, Selling & Administrative 5,000 Accumulated Depreciation, Selling & Administrative 5,000 Accumulated Depreciation, Factory 45,000 To record depreciation h. Manufacturing Overhead 72,000 Rental Expense 18,000 Accounts Payable 90,000 To record cost of rent i. Misc. Selling and Administrative Expense 17,000 Accounts Payable 17,000 To record misc. selling & administrative expense j. Work In Process Inventory, Job #???? 240,000 Manufacturing Overhead 240,000 To record the application of MOH k. Finished Goods Inventory 590,000 Work In Process Inventory, Job #???? 590,000 To record completed goods transferred to FG l. Accounts Receivable, Name??? 1,000,000 Sales 1,000,000 To record sales on account Cost of Goods Sold 600,000 Finished Goods 600,000 To record cost of goods sold Overhead account to COGS. m. Cost of Goods Sold 3,000 Manufacturing Overhead 3,000 To close the Manufacturing Overhead Account
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