Alake Company is a manufacturing firm that uses job-order costing. At the beginn
ID: 2425771 • Letter: A
Question
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 materials$19,000
Work in process$82,000
Finished 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 (budget) that it would work 40,000 machine-hours and incur $280,000 in manufacturing overhead cost (predetermined overhead rate). The following transactions were recorded for the year:
a.Raw materials were purchased, $400,000.
b. Raw materials were requisitioned for use in production, $450,000 ($20,000 indirect).
c. The following employee costs were incurred: direct labor, $230,000; indirect labor, $65,000; and administrative salaries, $117,000.
d. Selling costs, $120,000.
e. Factory utility costs, $48,000.
f. Depreciation for the year was $150,000 of which $130,000 is related to factory operations and $20,000 is related to selling, general, and administrative activities.
g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 38,000 machine-hours.
h.The cost of goods manufactured (completed) for the year was $800,000.
i. Sales for the year totaled $1,200,000 and the costs on the job cost sheets of the goods that were sold totaled $900,000.
j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold. Show a "T" Account to calculate the over/under applied overhead.
Required: Prepare the appropriate journal entry for each of the items above (a. through j. — one journal for each item - TEN JOURNALS). You can assume that all transactions with employees, customers, and suppliers were conducted onaccount or credit.
Explanation / Answer
The following journal entry is to be made
1) Raw material Inventory A/c Dr 400,000
To Account Payable A/c 400,000
2) Work in progress A/c Dr 926,000
To Raw material Inventory A/c 430,000
To Manufacturing Wages A/c 230,000
To Manufacturing overhead A/c 266,000
To Manufacturing Wages A/c 230,000
To Manufacturing Overhead A/c 266,000
3) Manufacturing Wages A/c Dr 230,000
To Wages payable A/c 230,000
4) Manufacturing Overhead A/c Dr 266,000
To Raw material Inventoty A/c 20,000
To Factory Utilities A/c 48,000
To Indirect Labour A/c 65,000
To Depriciation A/c 130,000
To Cost of good sold A/c 3,000
5) Salary A/c Dr 117,000
To Account Payable A/c 117,000
6) Selling Cast A/c Dr 120,000
Other administrative expenses A/c Dr 20,000
To Account Payable A/c 140000
7) Depriciation Expenses A/c Dr 20,000
To Accumulated Depriciation A/c 20,000
8) Cost of good manufactured A/c Dr 800,000
Work in Progess Inventory A/c Dr 208,000
To Work in progress A/c 1008,000
9) Cost of goods sold A/c Dr 900,000
Finished goods inventory A/c Dr 189000
To Opening finished goods inventory A/c 32,000
To Salary A/c 120,000
To other administrative Exp A/c 117,000
To Accumulated Depriciation A/c 20,000
To cost of good manufactured A/c 800,000
10)Sales A/c Dr 1200000
Inventory A/c Dr 189000
To Cost of good sold A/c 903000
To Profit & loss A/c 492,000
The calculation of Over / under manufacturing overhead
To Raw material 20000 By work in progess 266,000
To indirect labour 65,000
To factory utilities 48,000
To Depriciation 130,000
To Cost of good sold 3000
266000 266000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.