Concept explainers
Sultan, Inc. manufactures goods to special order and uses a
Required:
- 1. Prepare a schedule reflecting the cost of each of the four jobs.
- 2. Prepare
journal entries to record the transactions. - 3. Compute the ending balance in Work in Process.
- 4. Compute the ending balance in Finished Goods.
1.
Prepare a schedule that reflects the cost of all four jobs.
Explanation of Solution
Prepare a schedule that reflects the cost of all four jobs.
Particulars |
Job 101 ($) | Job 102 ($) | Job 103 ($) |
Job 104 ($) |
Total Cost ($) |
Direct Materials | 2,200 | 5,700 | 7,100 | 1,700 | 16,700 |
Direct Labor | 2,700 | 6,800 | 9,200 | 2,100 | 20,800 |
Factory Overhead | 1,200 | 2,000 | 3,800 | 1,000 | 8,000 |
Total | 6,100 | 14,500 | 20,100 | 4,800 | 45,500 |
Table (1)
2.
Provide journal entry to record the given transactions.
Explanation of Solution
Provide journal entry to record the given transactions.
Date | Accounts title and explanation | Debit ($) | Credit ($) |
a | Materials | 37,000 | |
Accounts payable | 37,000 | ||
(To record materials purchased on account) | |||
b | Work in Process | 16,700 | |
Factory overhead | 1,350 | ||
Materials | 18,050 | ||
(To record issue of direct materials and indirect materials) | |||
c | Payroll | 23,050 | |
Wages Payable | 23,050 | ||
(To record factory wages and salaries) | |||
d | Work in Process | 20,800 | |
Factory overhead | 2,250 | ||
Payroll | 23,050 | ||
(To record payment of wages to the labor) | |||
e | Factory overhead | 2,400 | |
Accounts payable | 2,400 | ||
(To record factory overhead costs on account) | |||
f. | Factory overhead | 2,000 | |
Accumulated Depreciation - Machinery | 2,000 | ||
(To record depreciation on factory machine) | |||
g. | Work in Process | 8,000 | |
Factory Overhead | 8,000 | ||
(To record transfer of factory overhead to Work-in process) | |||
h. | Finished Goods (1) | 40,700 | |
Work in Process | 40,700 | ||
(To record the transfer of cost of completed work to finished goods) | |||
i | Accounts receivable | 39,000 | |
Sales | 39,000 | ||
(To record the sale made on account) | |||
Cost of goods sold (2) | 20,600 | ||
Finished goods | 20,600 | ||
(To record the cost of goods sold) |
Table (2)
Working note 1: Calculate the cost of completed work (finished goods).
Working note 2: Calculate the cost of goods sold.
3.
Calculate the ending balance in work-in process.
Explanation of Solution
Calculate the ending balance in work-in process.
Hence, the ending balance in work-in process is $4,800.
4.
Calculate the ending balance in finished goods.
Explanation of Solution
Calculate the ending balance in finished goods.
Hence, the ending balance in finished goods is $20,100.
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Chapter 1 Solutions
Principles of Cost Accounting
- Gerken Fabrication Inc. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of March: a. Compute the total production cost of each job. b. Prepare the journal entries to charge the costs of materials, labor, and factory overhead to Work in Process. c. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. d. Compute the unit cost of each job. e. Compute the selling price per unit for each job, assuming a mark-on percentage of 50%.arrow_forwardLeen Production Co. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of May: a. Compute the total production cost of each job. b. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. c. Compute the selling price per unit for each job, assuming a mark-on percentage of 40%. d. Prepare the journal entries to record the sale of Job 1065.arrow_forwardChannel Products Inc. uses the job order cost system of accounting. The following is a list of the jobs completed during March, showing the charges for materials issued to production and for direct labor. Assume that factory overhead is applied on the basis of direct labor costs and that the predetermined rate is 200%. Required: Compute the amount of overhead to be added to the cost of each job completed during the month. Compute the total cost of each job completed during the month. Compute the total cost of producing all the jobs finished during the month.arrow_forward
- Use the space provided below to prepare six summary journal entries for the month of August. These entries record (1) cost of direct materials used, (2) cost of direct labor, (3) cost of applied overhead, (4) cost of jobs completed, (5) cost of goods sold, and (6) total sales on account. Then set up T-accounts for Work in Process, Finished Goods, Cost of Goods Sold, and Sales. Post the entries to the appropriate accounts and then balance each account. Finally, prepare a supporting schedule by job number showing the cost of ending work in process, finished goods, and cost of goods sold.arrow_forwardBangor Products Co. obtained the following information from its records for April: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for April: a. The gross profit or loss for each job completed and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)arrow_forwardSpokane Production Co. obtained the following information from its records for July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for July: a. The gross profit or loss for each job completed and sold, and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)arrow_forward
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