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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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(Appendix 4A) Journal Entries

Yurman Inc. uses a job-order costing system. During the month of May, the following transactions occurred:

  1. a. Purchased materials on account for $29,670.
  2. b. Requisitioned materials totaling $24,500 for use in production. Of the total, $9,200 was for Job 58, $8,900 for Job 59, and the remainder for Job 60.
  3. c. Incurred direct labor of $32,400, with an average wage of $18 per hour. Job 58 used 800 hours; Job 59, 600 hours; and Job 60, 400 hours.
  4. d. Incurred and paid actual overhead of $17,880 (credit Various Payables).
  5. e. Charged overhead to production at the rate of $4.80 per direct labor hour.
  6. f. Completed and transferred Jobs 58 and 59 to Finished Goods.
  7. g. Sold Job 57 (see beginning balance of Finished Goods) and Job 58 to their respective clients on account for a price of cost plus 40%.

Beginning balances as of May 1 were:

Chapter 4, Problem 50E, (Appendix 4A) Journal Entries Yurman Inc. uses a job-order costing system. During the month of May,

Required:

  1. 1. Prepare the journal entries for Transactions a through g.
  2. 2. Prepare brief job-order cost sheets for Jobs 58, 59, and 60.
  3. 3. Calculate the ending balance of Raw Materials.
  4. 4. Calculate the ending balance of Work in Process.
  5. 5. Calculate the ending balance of Finished Goods.

1.

To determine

Journalize the transactions.

Explanation

Job order costing:

A costing system which accumulates the cost on the basis of job is known job-order costing. It accumulates the cost incurred by different jobs in order to get the total production cost.

Pass the journal entries:

Record raw materials purchased on credit:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Raw material 29,670 
 Accounts payable  29,670
 (To record raw materials purchased on credit)   

Table (1)

  • • Raw material is an asset and it increased by $29,670. Therefore, debit raw material with $29,670.
  • • Accounts payable is a liability and it increased by $29,670. Therefore, credit accounts payable with $29,670.

Record work in process:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Work in process 24,500 
 Raw material  24,500
 (To recordwork in progress)   

Table (2)

  • • Work in process is an asset and it increased by $24,500. Therefore, debit work in process with $24,500.
  • • Raw material is an asset and it decreased by $24,500. Therefore, credit raw material with $24,500.

Record wages payable:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Work in process 32,400 
 Wages payable  24,500
 (To recordwages payable)   

Table (3)

  • • Work in process is an asset and it increased by $32,400. Therefore, debit work in process with $32,400.
  • • Wages payable is a liability and it increased by $32,400. Therefore, credit wages payable with $32,400.

Record actual overhead paid:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Overhead 17,880 
 Various payable  17,880
 (To recordactual overhead paid)   

Table (4)

  • • Overhead is an expense and it increased by $17,880. Therefore, debit overhead with $17,880.
  • • Various payable is a liability and it increased by $17,880. Therefore, credit various payable with $17,880.

Record overhead charged to production:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Work in process 8,640 
 Overhead1  8,640
 (To recordoverhead charged)   

Table (5)

  • • Work in process is an asset and it increased by $8,640. Therefore, debit work in process with $8,640.
  • • Overhead is an expense and it decreased by $8,640. Therefore, credit overhead with $8,640.

Record finished goods:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Finished goods2 50,020 
 Work in process  50,020
 (To recordcompleted jobs 58 and 59 transferred to finished goods account)   

Table (6)

  • • Finished goodsare an asset and it increased by $50,020...

2.

To determine

Construct a brief job-order cost sheets for each job as of April 30.

3.

To determine

Compute ending balance of raw materials.

4.

To determine

Compute ending balance in work in process.

5.

To determine

Compute ending balance of finished goods.

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