TCO F) Alake Company is a manufacturing firm that uses job-order costing. At the
ID: 2386152 • Letter: T
Question
TCO F) Alake Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows:RAW MATEIALES $19,000
WORK IN PROCESS $82,000
FINISDED GOODS $32,000
The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 36,000 machine-hours and incur $216,000 in manufacturing overhead cost. The following transactions were recorded for the year:
i. Raw materials were purchased, $443,000.
ii. Raw materials were requisitioned for use in production, $450,000 ($435,000 direct and $15,000 indirect).
iii. The following employee costs were incurred: direct labor, $229,000; indirect labor, $54,000; and administrative salaries, $117,000.
iv. Selling costs, $119,000.
v. Factory utility costs, $21,000.
vi. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities.
vii. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 38,000 machine-hours.
viii. The cost of goods manufactured for the year was $910,000.
xiv. Sales for the year totaled $1,173,000 and the costs on the job cost sheets of the goods that were sold totaled $895,000.
xv. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold.
Required: Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.
Explanation / Answer
a) Rawmaterials A/c.......Dr. 443,000 To cash A/c 443,000 b) Work in process A/c........Dr. 450,000 To Rawmaterials A/c 450,000 c) Direct labour A/c....Dr. 229,000 Indirect labour A/c...Dr. 54,000 Administartive salaries A/c....Dr. 117,000 To cash A/c 400,000 d) Selling expense A/c.........Dr. 119,000 To cash a/c 119,000 e) Factory utilities exp A/c......Dr. 21000 To cash a/c 21,000 f) Depreciation A/c.........Dr. 121,000 To profit and loss A/c 121,000 Manufacturing overhead A/c...........Dr 114,000 Selling and administrative overhead A/c......Dr. 7,000 To Depreciation A/c 121,000 g) Work in process A/c..........Dr. 228,000 To Manufacturing overhead 228,000 (216000/36000*38000)
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