Prepare journal entries for the following transactions during the month of Febru

Question

Prepare journal entries for the following transactions during the month of February 2007.

a. Raw materials were purchased, $20,000.

b. Raw materials of $25,000 were requisitioned for use in production, $10,000 for Job # MSM-1; $4,000 for Job # MSM-2 and $1,000 was for indirect materials.

c. The following labor hours and costs were incurred:

Job # MSM-1 - 50 hours at a total cost of $10,000

Job # MSM-2 - 250 hours at a total cost of $5,000

Indirect labor in the Factory operations   - 200 hours at a total cost of $3,000

Selling & Administrative salaries at a total cost of $10,000.

d. Selling & Administrative expense of $13,000.

e. Factory utility costs, $12,000.

f. Depreciation expense for the month was a total of $10,000. Of this amount $6,000 is related to factory operations and $4,000 is related to selling & administrative activities.

Explanation / Answer

a) Raw materials 20000 Accounts payable 20000 b) WIP Inventory 14000 Manufacturing overhead 11000 Raw materials 25000 Note: The figures given for the two jobs and indirect materials do not total to $25000. Hence, indirect materials has been taken as $11000. Please refer the correct figures and amend the entry accordingly. c) WIP Inventory 15000 Manufacturing overhead 3000 Salaries expense-Selling and administration 10000 Wages and salaries payable 28000 d) Selling and administrative expense 13000 Cash 13000 e) Manufacturing overhead 12000 Cash 12000

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