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(Appendix 4A) Journal Entries, Job Costs The following transactions occurred during the month of April for Nelson Company: a. Purchased materials costing $4,610 on account. b. Requisitioned materials totaling $4,800 for use in production, $3,170 for Job 518 and the remainder for Job 519. c. Recorded 65 hours of direct labor on Job 518 and 90 hours on Job 519 for the month. Direct laborers are paid at the rate of $14 per hour. d. Applied overhead using a plantwide rate of $6.20 per direct labor hour. e. Incurred and paid in cash actual overhead for the month of $973. f. Completed and transferred Job 518 to Finished Goods. g. Sold on account Job 517, which had been completed and transferred to Finished Goods in March, for cost ($2,770) plus 25%. Required: 1. Prepare journal entries for Transactions a through e. 2. Prepare job-order cost sheets for Jobs 518 and 519. Prepare journal entries for Transactions f and g. ( Note: Round to the nearest dollar.) 3. Prepare a schedule of cost of goods manufactured for April. Assume that the beginning balance in the raw materials account was $1,025 and that the beginning balance in the work-in-process account was zero.

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773
BuyFind

Managerial Accounting: The Corners...

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

Solutions

Chapter
Section
Chapter 4, Problem 60P
Textbook Problem
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(Appendix 4A) Journal Entries, Job Costs

The following transactions occurred during the month of April for Nelson Company:

  1. a. Purchased materials costing $4,610 on account.
  2. b. Requisitioned materials totaling $4,800 for use in production, $3,170 for Job 518 and the remainder for Job 519.
  3. c. Recorded 65 hours of direct labor on Job 518 and 90 hours on Job 519 for the month. Direct laborers are paid at the rate of $14 per hour.
  4. d. Applied overhead using a plantwide rate of $6.20 per direct labor hour.
  5. e. Incurred and paid in cash actual overhead for the month of $973.
  6. f. Completed and transferred Job 518 to Finished Goods.
  7. g. Sold on account Job 517, which had been completed and transferred to Finished Goods in March, for cost ($2,770) plus 25%.

Required:

  1. 1. Prepare journal entries for Transactions a through e.
  2. 2. Prepare job-order cost sheets for Jobs 518 and 519. Prepare journal entries for Transactions f and g. (Note: Round to the nearest dollar.)
  3. 3. Prepare a schedule of cost of goods manufactured for April. Assume that the beginning balance in the raw materials account was $1,025 and that the beginning balance in the work-in-process account was zero.

Expert Solution

1.

To determine

Journalize transactions from a through e.

Explanation of Solution

Job order costing

Job-order costing is often used by firms that manufacture goods or services that are heterogeneous in nature. It accumulates the cost performed by different jobs in order to get the total production cost.

Record raw materials purchased:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Raw material 4,610 
 Accounts payable  4,610
 (To record raw materials purchased on credit)   

Table (1)

  • • Raw material is an asset and it increased by $4,610. Therefore, debit raw material with $4,610.
  • • Accounts payable is a liability and it increased by $4,610. Therefore, credit accounts payable with $4,610.

Record work in process:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Work in process 4,800 
 Raw material  4,800
 (To record work in progress)   

Table (2)

  • • Work in process is an asset and it increased by $4,800. Therefore, debit work in process with $4,800.
  • • Raw material is an asset and it decreased by $4,800. Therefore, credit raw material with $4,800.

Record wages payable:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Work in process1 2,170 
 Wages payable  2,170
 (To record wages payable)   

Table (3)

  • • Work in process is an asset and it increased by $2,170. Therefore, debit work in process with $2,170.
  • • Wages payable is a liability and it increased by $2,170. Therefore, credit wages payable with $2,170.

Record overhead charged to production:

DateAccount Title and ExplanationPost Ref.

Debit

($)

Credit

($)

 Work in process2 961 
 Overhead  961
 (To record overhead charged)   

Table (4)

  • • Work in process is an asset and it increased by $961...
Expert Solution

2.

To determine

Make job-order cost sheet for Job 518 and 519 and journalize transactions from f to g.

Expert Solution

3.

To determine

Construct a schedule of cost of goods manufactured for April.

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