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The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.Raw materials purchased on account, $210,000.Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials).Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.Depreciation recorded on factory equipment, $40,000.Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable).The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.Required:Prepare journal entries to record the information given above.Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.

Question

The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.

  1. Raw materials purchased on account, $210,000.
  2. Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials).
  3. Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.
  4. Depreciation recorded on factory equipment, $40,000.
  5. Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable).
  6. The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.
  7. Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
  8. Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.


Required:

  1. Prepare journal entries to record the information given above.
  2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.
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Step 1

1.

Prepare journal entries:

 

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Step 2
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Step 3

2.

T- Accounts for Manufacturing ...

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