2. The following activities took place in the work in process inventory account

Question

2. The following activities took place in the work in process inventory account during April: Beginning balance Direct materials used s 15, 000 120,000 Total manufacturing labor incurred in April was $162,500, 80% of this amount represented direct labor. The predetermined manufacturing overhead rate is 120% of direct labor cost. Actual manufacturing overhead costs for April amounted to $150,000 Two jobs were completed with total costs of $120,000 and $85,000, respectively. They were sold on account for $265, 000 and $155, 000, respectively. a) Compute the balance in work in process inventory on April 30. b) Record the journai entry for direct materials used in April c) Record the journal entry for total manufacturing labor incurred in d) Record the journal entry to allocate manufacturing labor to the e) Record the journal entry for allocated manufacturing overhead for f) Record the entry to move the completed jobs into finished goods g) Record the entry to sell the two completed jobs on account. April. appropriate accounts. April. inventory

Explanation / Answer

a) Balance in work in process inventory on April 30 = 15000 + 120000 + (80% x 162500) + (120% x 80% x 162500) - 120000 - 85000 = $216000

General Journal Debit Credit b) Work in process inventory 120000 Raw materials inventory 120000 (To record direct materials used) c) Wages expense/Manufacturing labor expense 162500 Wages payable/Manufacturing labor payable 162500 (To record manufacturing labor incurred) d) Work in process inventory (162500 x 80%) 130000 Manufacturing overheads (162500 x 20%) 32500 Wages expense/Manufacturing labor expense 162500 (To record allocation of manufacturing labor) e) Work in process inventory (130000 x 120%) 156000 Manufacturing overheads 156000 (To record allocation of manufacturing overheads) f) Finished goods inventory (120000 + 85000) 205000 Work in process inventory 205000 (To record jobs completed and transferred) g) Accounts receivable (265000 + 155000) 420000 Sales revenue 420000 (To record sales on account) Cost of goods sold 205000 Finished goods inventory 205000 (To record cost of goods sold)

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