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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

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

Entries for costs in a job order cost system

Munson Co. uses a job order cost system, the following data summarize the operations related to production for July:

a. Materials purchased on account, $225,750

b. Materials requisitioned, $217,600, of which $17,600 was for general factory use C. Factory Labor used, $680,000, of which $72,300 was indirect

d. Other costs incurred on account for factory overhead, $330,000; selling expenses, $180,000; and administrative expenses, $126,000

e. Prepaid expenses expired for factory overhead, $27,500; for selling expenses, $8,100; and for administrative expenses, $5,250

f. Depreciation of office building was $44,500; of office equipment, $16,800; and of factory equipment, $55,100

g. Factory overhead costs applied to jobs, $548,000

h. Jobs completed, $1,140,000

i. Cost of goods sold, $1,128,000

Instructions

Journalize the entries to record the summarized operations.

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 summarized operations

Explanation

The journal entries of operations of Company M is as follows:

Date Account titles and Explanation Debit
($)
Credit
($)
a Materials 225,750  
      Accounts Payable   225,750
  (Record materials purchased)    
       
b Work in process 200,000  
  Factory overhead 17,600  
      Materials   217,600
  (Record material requisitioned to jobs)    
       
c Work in process 607,700  
  Factory overhead 72,300  
      Wages payable   680,000
  (Record factory labor used in production)    
       
d Factory overhead 330,000  
  Selling expenses 180,000  
  Administrative expenses 126,000  
      Accounts payable   636,000
  (Record other cost incurred in production)    
       
e Factory overhead 27,500  
  Selling expenses 8,100  
  Administrative expenses 5,250  
      Prepaid expenses   40,850
  (Record prepaid expenses expired for other cost)    
       
f Depreciation expense – Office building 44,500  
  Depreciation expense – Office Equipment 16,800  
  Factory overhead 55,100  
      Accumulated Depreciation expense –Building & Equipment  

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