2. Post your entries to T-accounts. (Don’t forget to enter the opening inventory
ID: 2419252 • Letter: 2
Question
2. Post your entries to T-accounts. (Don’t forget to enter the opening inventory balances below.)
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $336,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year (all purchases and services were acquired on account): a. Raw materials purchased for use in production, $245,000 b. Raw materials requisitioned for use in production (all direct materials), $230,000. C. Utility bills were incurred, $68,000 (85% related to factory operations, and the remainder related to selling and administrative activities). d. Salary and wage costs were incurred: Direct labor (1,125 hours) Indirect labor Selling and administrative salaries $275,000 $99,000 $155,000Explanation / Answer
Journal Entries:
S.No.
Accounts/ Explanation
Debit
Credit
a.
Raw Material Inventory
$ 245,000.00
Accounts Payable
$ 245,000.00
(Being material purchased on account)
b.
Work In Process
$ 230,000.00
Raw Material Inventory
$ 230,000.00
(Being Material used in production )
c.
Factory Overheads (68000*85%)
$ 57,800.00
Selling and Admn Expenses = (68000*15%)
$ 10,200.00
Accounts payable
$ 68,000.00
(Being expenses incurred)
d.
Work in Process
$ 275,000.00
Factory Overheads
$ 99,000.00
Selling and Admn Expenses
$ 155,000.00
Salary and wages Payable
$ 529,000.00
e.
Factory Overheads
$ 63,000.00
Accounts payable
$ 63,000.00
(Being maintenance cost incurred)
f.
Selling and Admn Expenses
$ 145,000.00
Accounts payable
$ 145,000.00
(Being advertising cost incurred)
g.
Factory Overheads (81000*70%)
$ 56,700.00
Selling and Admn Expenses (81000*30%)
$ 24,300.00
Accumulated Depreciation-Equipment
$ 81,000.00
(Being Depreciation recorded)
h.
Factory Overheads (106000*75%)
$ 79,500.00
Selling and Admn Expenses (106000*25%)
$ 26,500.00
Accounts payable
$ 106,000.00
(Being rent expense incurred)
i.
Work in Process ($336000/1050 hours )*1125 Hours
$ 360,000.00
Factory Overheads
$ 360,000.00
(Being overhead applied on jobs)
j.
Finished Goods Inventory
$ 860,000.00
Work in Process
$ 860,000.00
(Being goods manufactured and transferred )
k.
Accounts Receivables
$ 1,650,000.00
Sales
$ 1,650,000.00
(Being goods sold on account)
Cost of Goods Sold
$ 890,000.00
Finished Goods Inventory
$ 890,000.00
(Being goods sold)
T Accounts:
Raw Material Inventory
Ref.
Debit
Ref.
Credit
Bal.
$ 39,000.00
b.
$ 230,000.00
a.
$ 245,000.00
Bal.
$ 54,000.00
Accounts Payable
Ref.
Debit
Ref.
Credit
a.
$ 245,000.00
c.
$ 68,000.00
e.
$ 63,000.00
f.
$ 145,000.00
h.
$ 106,000.00
Bal.
$ 627,000.00
Work In Process
Ref.
Debit
Ref.
Credit
Bal.
$ 30,000.00
j.
$ 860,000.00
b.
$ 230,000.00
d.
$ 275,000.00
i.
$ 360,000.00
Bal.
$ 35,000.00
Factory Overheads
Ref.
Debit
Ref.
Credit
c.
$ 57,800.00
i.
$ 360,000.00
d.
$ 99,000.00
e.
$ 63,000.00
g.
$ 56,700.00
h.
$ 79,500.00
Bal.
$ 4,000.00
Selling and Admn Expenses
Ref.
Debit
Ref.
Credit
c.
$ 10,200.00
d.
$ 155,000.00
g.
$ 24,300.00
h.
$ 26,500.00
Bal.
$ 216,000.00
Accumulated Depreciation-Equipment
Ref.
Debit
Ref.
Credit
g.
$ 81,000.00
Bal.
$ 81,000.00
Finished Goods Inventory
Ref.
Debit
Ref.
Credit
Bal.
$ 69,000.00
k.
$ 890,000.00
j.
$ 860,000.00
Bal.
$ 39,000.00
Accounts Receivables
Ref.
Debit
Ref.
Credit
k.
$ 1,650,000.00
Bal.
$ 1,650,000.00
Sales
Ref.
Debit
Ref.
Credit
k
$ 1,650,000.00
Bal.
$ 1,650,000.00
Cost of Goods Sold
Ref.
Debit
Ref.
Credit
k.
$ 890,000.00
Bal.
$ 890,000.00
Journal Entries:
S.No.
Accounts/ Explanation
Debit
Credit
a.
Raw Material Inventory
$ 245,000.00
Accounts Payable
$ 245,000.00
(Being material purchased on account)
b.
Work In Process
$ 230,000.00
Raw Material Inventory
$ 230,000.00
(Being Material used in production )
c.
Factory Overheads (68000*85%)
$ 57,800.00
Selling and Admn Expenses = (68000*15%)
$ 10,200.00
Accounts payable
$ 68,000.00
(Being expenses incurred)
d.
Work in Process
$ 275,000.00
Factory Overheads
$ 99,000.00
Selling and Admn Expenses
$ 155,000.00
Salary and wages Payable
$ 529,000.00
e.
Factory Overheads
$ 63,000.00
Accounts payable
$ 63,000.00
(Being maintenance cost incurred)
f.
Selling and Admn Expenses
$ 145,000.00
Accounts payable
$ 145,000.00
(Being advertising cost incurred)
g.
Factory Overheads (81000*70%)
$ 56,700.00
Selling and Admn Expenses (81000*30%)
$ 24,300.00
Accumulated Depreciation-Equipment
$ 81,000.00
(Being Depreciation recorded)
h.
Factory Overheads (106000*75%)
$ 79,500.00
Selling and Admn Expenses (106000*25%)
$ 26,500.00
Accounts payable
$ 106,000.00
(Being rent expense incurred)
i.
Work in Process ($336000/1050 hours )*1125 Hours
$ 360,000.00
Factory Overheads
$ 360,000.00
(Being overhead applied on jobs)
j.
Finished Goods Inventory
$ 860,000.00
Work in Process
$ 860,000.00
(Being goods manufactured and transferred )
k.
Accounts Receivables
$ 1,650,000.00
Sales
$ 1,650,000.00
(Being goods sold on account)
Cost of Goods Sold
$ 890,000.00
Finished Goods Inventory
$ 890,000.00
(Being goods sold)
T Accounts:
Raw Material Inventory
Ref.
Debit
Ref.
Credit
Bal.
$ 39,000.00
b.
$ 230,000.00
a.
$ 245,000.00
Bal.
$ 54,000.00
Accounts Payable
Ref.
Debit
Ref.
Credit
a.
$ 245,000.00
c.
$ 68,000.00
e.
$ 63,000.00
f.
$ 145,000.00
h.
$ 106,000.00
Bal.
$ 627,000.00
Work In Process
Ref.
Debit
Ref.
Credit
Bal.
$ 30,000.00
j.
$ 860,000.00
b.
$ 230,000.00
d.
$ 275,000.00
i.
$ 360,000.00
Bal.
$ 35,000.00
Factory Overheads
Ref.
Debit
Ref.
Credit
c.
$ 57,800.00
i.
$ 360,000.00
d.
$ 99,000.00
e.
$ 63,000.00
g.
$ 56,700.00
h.
$ 79,500.00
Bal.
$ 4,000.00
Selling and Admn Expenses
Ref.
Debit
Ref.
Credit
c.
$ 10,200.00
d.
$ 155,000.00
g.
$ 24,300.00
h.
$ 26,500.00
Bal.
$ 216,000.00
Accumulated Depreciation-Equipment
Ref.
Debit
Ref.
Credit
g.
$ 81,000.00
Bal.
$ 81,000.00
Finished Goods Inventory
Ref.
Debit
Ref.
Credit
Bal.
$ 69,000.00
k.
$ 890,000.00
j.
$ 860,000.00
Bal.
$ 39,000.00
Accounts Receivables
Ref.
Debit
Ref.
Credit
k.
$ 1,650,000.00
Bal.
$ 1,650,000.00
Sales
Ref.
Debit
Ref.
Credit
k
$ 1,650,000.00
Bal.
$ 1,650,000.00
Cost of Goods Sold
Ref.
Debit
Ref.
Credit
k.
$ 890,000.00
Bal.
$ 890,000.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.