Zelda Manufacturing organized in June and recorded the following transactions du
ID: 2471345 • Letter: Z
Question
Zelda Manufacturing organized in June and recorded the following
transactions during June, its first month of operations:
1. Purchased materials costing $800,000.
2. Used direct materials in production costing $485,000.
3. Applied direct labor costs of $500,000 to various jobs.
4.Applied manufacturing overhead at a rate of $10 per direct
labor hour. (Direct labor workers earn $20 per hour.)
5.Incurred actual manufacturing overhead costs of $245,000
(credit “Various Accounts”).
6. Transferred completed jobs costing $745,000 to finished goods.
7.Sold completed jobs for $1,000,000 on account. The cost
applied to the jobs sold totaled $615,000.
8.Closed the Manufacturing Overhead account directly to Cost of
Goods Sold on June 30.
1. Prepare a journal entry for each of the eight transactions listed above.
2. Compute the balance of the Cost of Goods Sold account at June
30.
3.Determine the company's inventory balances 3. at the end of June.
Explanation / Answer
a. Journal Entry 1) Materials Inventory $800,000 Accounts Payable $800,000 2) Work-in-Process Inventory $485,000 Material Inventory $485,000 3) Work in Process Inventory $500,000 Manufacturing Overhead $500,000 4) Cost of good sold $500,000 Manufacturing Overhead $500,000 5) Manufacturing overhead $245,000 Accounts Payable $245,000 6) Finished Goods Inventory $745,000 Work in process inventory $745,000 7) Sales $1,000,000 Accounts Receivables $1,000,000 Cost of Good Sold $615,000 Finished Goods Inventory $615,000 8) Cost of Good Sold $755,000 Manufacturing Overhead $755,000 ($500000 + 500000 - 245,000 b) Cost of Good Sold = $500000 +$615,000 + $755,000 $1,870,000 c. Material Inventory $800,000 Work in process inventory(485000+500000- 745000) $240,000 Finished Goods inventory ($745,000 - $615,000) $130,000
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