Job Cost Journal Entries Prior to the beginning of 2016, Stapleton Company estim
ID: 2523068 • Letter: J
Question
Job Cost Journal Entries
Prior to the beginning of 2016, Stapleton Company estimated that it would incur $153,000 of manufacturing overhead cost during 2016, using 17,000 direct labor hours to produce the desired volume of goods. On January 1, 2016, beginning balances of Materials Inventory, Work in Process Inventory, and Finished Goods Inventory were $48,000, $-0-, and $87,000, respectively.
Required
Prepare general journal entries to record the following for 2016:
A. Purchased materials on account, $316,000.
Material inventory 316000
Accounts payable 316000
B. Of the total dollar value of materials used, $284,000 represented direct material and $35,000 indirect material.
Work in process inventory 284000
Manufacturing overhead 35000
Materials inventory 319000
C.Determined total factory labor, $189,000 (18,000 hrs. @ $10.50/hr.).
D.Of the factory labor, 15,800 were direct labor hours.
Debit Credit
Work in process inventory 165900
Manufacturing overhead 23100
Wages payable 319000
E.Applied manufacturing overhead based on direct labor hours to work in process.
Debit Credit
Work in process inventory ?
Material inventory ?
F.Determined actual manufacturing overhead other than those items already recorded, $83,000. (Credit Accounts Payable.)
Debit Credit
Manufacturing overhead ?
Accounts payable ?
G.Ending inventories of work in process and finished goods were $57,000 and $71,800, respectively. Determine the cost of finished goods (credit WIP) and the cost of goods sold (credit FG inventory). Make separate entries.
Debit Credit
Manufacturing overhead ?
Work in process inventory ?
H.Transferred the balance in Manufacturing Overhead to Cost of Goods Sold.
Debit Credit
Manufacturing overhead ?
Cost of good sold ?
Explanation / Answer
Solution:
Journal Entry
Event
General Journal
Debit
Credit
A.
Materials Inventory
$316,000
Accounts payable
$316,000
B.
Work In Process Inventory
$284,000
Manufacturing Overhead
$35,000
Materials Inventory
$319,000
C&D
Work In Process Inventory (15,800 hrs x $10.50)
$165,900
Manufacturing Overhead (bal fig)
$153,100
Wages Payable
$319,000
E
Work IN Process Inventory (Applied MF OH Refer Note 1)
$142,200
Manufacturing Overhead
$142,200
F.
Manufacturing Overhead
$83,000
Accounts Payable
$83,000
G.
Finished Goods Inventory
$535,100
Work In Process Inventory
$535,100
Cost of Goods Sold (refer note 3)
$550,300
Finished Goods Inventory
$550,300
H.
Manufacturing Overhead (Refer note 4)
$1,100
Cost of Goods Sold
$1,100
Note 1 ---
Applied Manufacturing Overhead = Actual direct labor hours used x Predetermined Overhead Rate
Predetermined Overhead Rate = Total Estimated Manufacturing Overhead / Total Estimated Allocation base i.e. Direct Labor Hours
= $153,000 / 17,000 DLHs
= $9 per DLH
Applied Manufacturing Overhead = Actual direct labor hours used 15,800 hrs x Predetermined Overhead Rate $9
= $142,200
Note 2
$$
Work In Process Beginning Inventory
$0
Plus: Direct materials cost
$284,000
Plus: Direct Labor Cost
$165,900
Plus: Applied Manufacturing OH
$142,200
Total Manufacturing Cost
$592,100
Less: Ending Work In Process Inventory
-$57,000
Cost of Goods manufactured
$535,100
Note 3
Cost of Goods Sold = Beginning Finished Goods Inventory + Transferred from Work in Process – Ending Finished Goods Inventory
= $87,000 + $535,100 - $71,800
= $550,300
Note 4 – calculation of over or under applied manufacturing overhead
Applied Manufacturing Overheads = $142,200
Manufacturing Overhead Incurred = Indirect material $35,000 + Indirect Labor $23,100 + Other MFR OH $83,000
= $141,100
Applied Overheads are higher than actual overheads incurred, it means Overheads are OVER APPLIED by $1,100 (142,200 – 141,100)
So we need to Debit Manufacturing Overhead Account and Credit Cost of Goods Sold Account to end this over applied overhead.
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Event
General Journal
Debit
Credit
A.
Materials Inventory
$316,000
Accounts payable
$316,000
B.
Work In Process Inventory
$284,000
Manufacturing Overhead
$35,000
Materials Inventory
$319,000
C&D
Work In Process Inventory (15,800 hrs x $10.50)
$165,900
Manufacturing Overhead (bal fig)
$153,100
Wages Payable
$319,000
E
Work IN Process Inventory (Applied MF OH Refer Note 1)
$142,200
Manufacturing Overhead
$142,200
F.
Manufacturing Overhead
$83,000
Accounts Payable
$83,000
G.
Finished Goods Inventory
$535,100
Work In Process Inventory
$535,100
Cost of Goods Sold (refer note 3)
$550,300
Finished Goods Inventory
$550,300
H.
Manufacturing Overhead (Refer note 4)
$1,100
Cost of Goods Sold
$1,100
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