Problem 4-24 Mathews Guitar Company makes high-quality customized guitars. Mathe

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Problem 4-24 Mathews Guitar Company makes high-quality customized guitars. Mathews uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $105,000 and that 21,000 direct labor hours would be worked. At year-end, Dave, the company's founder and CEO, gives you the following information regarding Mathews's operations: 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $5,000 Work in Process Inventory $34,000 Finished Goods Inventory $48,000 2. During the year, the company purchased raw materials costing $75,000. All purchases were on account. 3. The production department requisitioned $60,000 of raw materials for use in production. Of those, 70% were direct materials 4. The company used 20,800 direct labor hours at a cost of $12 per hour during the year (credit Wages Payable). 5. The company used 4,000 indirect labor hours at a cost of $8 per hour (credit Wages Payable). paid $45,000 for insurance, utilities, and property taxes on the factory. All payments were cash payments. 7. The company recorded factory depreciation of $15,000. any applied manufacturing overhead to inventory based on the 20,800 labor hours actually worked during the year. 9. Products costing $398,000 were completed during the year and transferred to the Finished Goods Inventory. 10. During the year, the company sold products costing a total of $404,000. 11. The company closes under- and overapplied overhead to Cost of Goods Sold. Prepare journal entries for each of the transactions just listed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) No. Account Titles and Explanation Debit Credit 1. 2. Raw Materials Inventory 75000 75000 Accounts Payable (To record raw materials purchases) 3. Work in Process Inventory 42000

Explanation / Answer

overhead rate estimated manufactuirng overhead/direct labor hours 105000/21000 5 for fifthe entry the amount should be 4000*8= 32000 journal entry no General journal Debit Credit 8) Work in process inventory 104000 manufacturing overhead 104,000 (20,800*5) 10) cost of goods sold 404,000 finished goods inventory 404,000 11) cost of goods sold 6,000 manufacturing overhead 6,000 Raw materials BB 5,000 3) 60,000 2) 75,000 End ba 20,000 work in process inventory BB 34,000 9) 398,000 3) 42,000 4) 249,600 8) 104,000 EB 31,600 finished goods inventory BB 48,000 10) 404,000 9) 398,000 EB 42,000 cost of goods sold 10) 404,000 11) 6,000 EB 410,000 manufacturing overhead 3) 18,000 8) 104,000 5) 32,000 11) 6,000 6) 45,000 7) 15,000 EB 0

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