Allenton Company is a manufacturing firm that uses job-order costing. At the beg

Question

Allenton Company is a manufacturing firm that uses job-order costing. At the beginning of the year, the company's inventory balances were as follows: Raw materials Work in process Finished goods $26,000 $47,000 $133,000 The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 31,000 machine-hours and incur $248,000 in manufacturing overhead cost. The following transactions were recorded for the year a. Raw materials were purchased, $411,000 b. Raw materials were requisitioned for use in production $409,000 (5388,000 direct and $21,000 indirect) c. The following employee costs were incurred: direct labor, $145,000, indlirect labor, 561,000: and administrative salaries $190.00 a d. Selling costs. $148,000 e. Factory utility costs, $12,000.et f. Depreciation for the year was $121,000 of which $114,000 is related to factory operations and $7,000 is related to selling, general, and administrative activities. g. Manufacturing overhead was applied to jobs. The actual level of activity for the year was 29,000 machine-hours. d h. The cost of goods manufactured for the year was $783,000. i. Saies for the year totaled sf.To7.o0d and the costs on the job cost sheets of the goods that were sold totaled $768,000. Con), nal j. The balance in the Manufacturing Overhead account was closed out to Cost of Goods Sold. Required: Prepare the appropriate journal entry for each of the items above (a. through j.). You can assume that all transactions with employees, customers, and suppliers were conducted in cash.

Explanation / Answer

overhead rate = 248000/31000 8 thus overhead applied = 29,000*8 232000 No Accounting titles & Explanations Debit Credit a. Raw materials inventory 411,000 cash 411,000 b. Work in process inventory 388,000 Factory overhead 21,000 Raw materials inventory 409,000 c. Work in process inventory 145,000 Factory overhead 61,000 Administrative salaries 190,000 Cash 396,000 d. Selling expense 148,000 Cash 148,000 e. Facotry overhead 12,000 Cash 12,000 f. Factory overhead 114,000 Selling,general & adm expense 7,000 Accumulated depreciation 121,000 g. Work in process inventory 232,000 Factory overhead (29000*8) 232,000 h. Finished goods inventory 783,000 Work in process inventory 783,000 i. Cash 1,107,000 Sales 1,107,000 cost of goods sold 768,000 Finished goods inventory 768,000 j factory overhead 24,000 cost of goods sold 24,000 Manufacturing Account indirect materials(b) 21,000 Applied overhead 232,000 indirect labor © 61,000 Factory utilities (e ) 12,000 Factory deprecia(f) 114,000 end bal 24,000

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