Concept explainers
- (a) Purchased raw materials on account, $44,000.
- (b) Issued direct materials to production:
- (c) Issued indirect materials to production, $5,700.
- (d) Incurred direct labor costs:
- (e) Charged indirect labor to production, $3,400.
- (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, $5,300.
- (g) Applied factory overhead to each of the jobs using a predetermined factory overhead rate as follows:
- (h) Finished Job Nos. 205–208 and transferred to the finished goods inventory account as products L, M, N, and O.
- (i) Sold products L, M, N, and O, on account, for $21,000, $20,300, $19,000, and $20,500, respectively.
REQUIRED
- 1. Prepare general
journal entries to record transactions (a) through (i). - 2.
Post the entries to the work in process and finished goods Τ accounts only.
1.
Prepare general journal entries to record transactions (a) through (i).
Explanation of Solution
Job order costing:
Job order costing is one of the methods of cost accounting under which cost is collected and gathered for each job, work order, or project separately. It is a system by which a factory maintains a separate record of each particular quantity of product that passes through the factory. Job order costing is used when the products produced are significantly different from each other.
Prepare journal entry to record the given transactions.
Date | Accounts title and explanation |
Debit ($) |
Credit ($) |
a. | Material | 44,000 | |
Accounts payable | 44,000 | ||
(To record the purchase of materials on account.) | |||
b. | Work in process | 8,500 | |
Work in process | 9,600 | ||
Work in process | 8,000 | ||
Work in process | 9,000 | ||
Materials | 35,100 | ||
(To record direct materials incurred for the job: job no.205,206,207,208) | |||
c. | Factory overhead | 5,700 | |
Materials | 5,700 | ||
(To record the issuance of indirect materials) | |||
d. | Work in process | 5,400 | |
Work in process | 4,600 | ||
Work in process | 5,200 | ||
Work in process | 5,500 | ||
Wages payable | 20,700 | ||
(To record direct labor incurred for the job: job no.205,206,207,208) | |||
e. | Factory overhead | 3,400 | |
Wages payable | 3,400 | ||
(To record the indirect labor charged to production) | |||
f. | Factory overhead | 5,300 | |
Cash | 5,300 | ||
(To record the payment of electricity bill, heating oil, and repairs bills for the factory and charge made to production) | |||
g. | Work in process | 3,300 | |
Work in process | 3,900 | ||
Work in process | 3,300 | ||
Work in process | 3,900 | ||
Factory overhead | 14,400 | ||
(To record applied factory overhead to the job: job no.205,206,207,208) | |||
h. | Finished goods (Product L) | 17,200 | |
Work in process | 17,200 | ||
(To record the transfer of Job no. 205 to Product L) | |||
Finished goods (Product M) | 18,100 | ||
Work in process | 18,100 | ||
(To record the transfer of Job no.206 to Product M) | |||
Finished goods (Product N) | 16,500 | ||
Work in process | 16,500 | ||
(To record the transfer of Job no.207 to Product N) | |||
Finished goods (Product O) | 18,400 | ||
Work in process | 18,400 | ||
(To record the transfer of Job no.208 to Product O) | |||
i. | Accounts receivable | 21,000 | |
Sales | 21,000 | ||
(To record sale of product L) | |||
Cost of goods sold | 17,200 | ||
Finished goods (Product L) | 17,200 | ||
(To record cost of goods sold on finished goods of Product L) | |||
Accounts receivable | 20,300 | ||
Sales | 20,300 | ||
(To record sale of product M) | |||
Cost of goods sold | 18,100 | ||
Finished goods (Product M) | 18,100 | ||
(To record cost of goods sold on finished goods of Product M) | |||
Accounts receivable | 19,000 | ||
Sales | 19,000 | ||
(To record sale of product N) | |||
Cost of goods sold | 16,500 | ||
Finished goods (Product N) | 16,500 | ||
(To record cost of goods sold on finished goods of Product N) | |||
Accounts receivable | 20,500 | ||
Sales | 20,500 | ||
(To record sale of product O) | |||
Cost of goods sold | 18,400 | ||
Finished goods (Product O) | 18,400 | ||
(To record cost of goods sold on finished goods of Product O) |
(Table 1)
2.
Post the entries to the work in process and finished goods T accounts.
Explanation of Solution
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Chapter 26 Solutions
COLLEGE ACCOUNTING
- JOB ORDER COSTING TRANSACTIONS D K Enterprises makes wicker baskets. During the month of August, the company had four job orders: 501, 502, 503, and 504. Overhead was applied at predetermined rates, while actual factory overhead was recorded as incurred. All four jobs were completed. (a) Purchased raw materials on account, 44,000. (b) Issued direct materials to production: (c) Issued indirect materials to production, 5,000. (d) Incurred direct labor costs: (e) Charged indirect labor to production, 3,300. (f) Paid electricity, heating oil, and repair bills for the factory and charged to production, 5,200. (g) Applied factory overhead to each of the jobs using a predetermined factory overhead rate as follows: (h) Finished Job Nos. 501-504 and transferred to the finished goods inventory account as products W, X, Y, and Z, respectively. (i) Sold products W, X, Y, and Z for 17,500, 18,000, 16,900, and 19,000, respectively. REQUIRED 1. Prepare general journal entries to record transactions (a) through (i). Make compound entries for (b), (d), and (g), with separate debits for each job. 2. Post the entries to the work in process and finished goods T accounts only.arrow_forwardEntries and schedules for unfinished jobs and completed jobs Hildreth Company uses a job order cost system. The following data summarize the operations related to production for April, the first month of operations: A. Materials purchased on account, 147,000. B. Materials requisitioned and factory labor used: C. Factory overhead costs incurred on account, 6,000. D. Depreciation of machinery and equipment, 4,100. E. The factory overhead rate is 40 per machine hour. Machine hours used: F. Jobs completed: 101, 102, 103, and 105. G. Jobs were shipped and customers were billed as follows: Job 101, 62,900; Job 102, 80,700; Job 105, 45,500. Instructions 1. Journalize the entries to record the summarized operations. 2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month. 3. Prepare a schedule of unfinished jobs to support the balance in the work in process account. 4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.arrow_forwardJOURNAL ENTRIES FOR MATERIAL, LABOR, AND OVERHEAD Eto Manufacturing had the following transactions during the month: (a) Purchased raw materials on account, 70,000. (b) Issued direct materials to Job No. 300, 25,000. (c) Issued indirect materials to production, 10,000. (d) Paid biweekly payroll and charged direct labor to Job No. 300, 8,000. (e) Paid biweekly payroll and charged indirect labor to production, 3,000. (f) Issued direct materials to Job No. 301, 20,000. (g) Issued indirect materials to production, 4,000. (h) Paid miscellaneous factory overhead charges, 6,000. (i) Paid biweekly payroll and charged direct labor to Job No. 301, 10,000. (j) Paid biweekly payroll and charged indirect labor to production, 2,000. REQUIRED Prepare general journal entries for transactions (a) through (j).arrow_forward
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