CompanyX uses a job order cost system. The following data summarize the operatio

Question

CompanyX uses a job order cost system. The following data summarize the operations related to production for the month of January 20xx.

a) Materials purchased on account: $150,000

b) Materials requisitioned and Factory labor used:

JOB ORDER

MATERIALS

LABOR

601

$32,400

$19,300

602

$21,300

$15,200

603

$28,400

$17,500

604

$26,308

$16,395

605

$31,225

$18,422

General Factory Use

$5,300

$32,400

c) Factory overhead costs incurred on account: $34,500

d) Depreciation of machinery and equipment: $5,100

e) The factory overhead rate is $50 per machine hour.

Job Order

Machine Hours Used

601

320

602

225

603

300

604

285

605

312

f) Jobs completed: #601, #603, #605

g) Jobs shipped and billed: #601: $113,200,   #605: $88,350

Task:

Prepare the proper t-accounts and show all balances and DETERMINE GROSS PROFIT.

JOB ORDER

MATERIALS

LABOR

601

$32,400

$19,300

602

$21,300

$15,200

603

$28,400

$17,500

604

$26,308

$16,395

605

$31,225

$18,422

General Factory Use

$5,300

$32,400

Explanation / Answer

At the end of May, the following information is available.

Required: Prepare journal entries for any accounting adjustments required for items i. through v.

i. At the end of May, $3,200 supplies remained on hand.

ii. Rent paid in transaction b is rent for May and June.

iii. The expenditures in transaction f relate to a major ad campaign that will occur in June during the Tour de France.

iv. The truck is expected to be used for five years (60 months).

v. The deposit in transaction k is for a bike to be built and delivered in July.

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