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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Entries for factory costs and jobs completed

Old School Publishing Inc. began printing operations on January 1. Jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. Jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. In addition to the materials and labor charged directly to the jobs, $8,000 of indirect material is and $12,400 of indirect labor were used during the month. The cost sheets for the four jobs entering production during the month are as follows, in summary form:

images

Journalize the summary entry to record each of the following operations for January (one entry for each operation):

a. Direct and indirect materials used

b. Direct and indirect labor used

c. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost)

d. Completion of Jobs 301 and 302

(a)

To determine

Job order costing

Job order cost system provides a separate record of each particular quantity of product that passes through the factory. Each quantity that is manufactured in the business is known as job. Job order costing is used when the products produced are significantly different from each other.

To record: the journal entry to record the direct and indirect materials used.

Explanation

The journal entry is prepared as follows:

Date Account titles and Explanation Debit
($)
Credit
($)
January 01 Work in process  Table (2) 68,000  
  Factory overhead 8,000  
  Materials   76,000
  (Direct and indirect materials used during January)    

Table (1)

Working ...

(b)

To determine

To record: the journal entry to record the direct and indirect labor used.

(c)

To determine

To record: the journal entry to record the factory overhead applied to all four jobs.

(d)

To determine

To record: the journal entry to record the completion of jobs.

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