Exercise 3-5 Journal Entries and T-accounts [LO3-1, LO3-2] The Polarts Company u

Question

Exercise 3-5 Journal Entries and T-accounts [LO3-1, LO3-2] The Polarts Company uses a job-order costing system. The following transactions occurred in October a Raw materiats purchased on account, $209.000 b. Raw materials used in production, $190,000 (S152.000 direct materials and S38.000 indirect materials). C Accrued direct labor cost of $49,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $105,000 e. Other manufacturing overhead costs accrued during October, $129.000 t. The company applies manufacturing overhead cost to production using a predetermined rate of $6 per machine-hour. A total of 76,100 machine-hours were used in October g Jobs costing $513,000 according to their job cost sheets were completed during October and transferred to Finished Goods h. Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 30% above cost. Required: 1 Prebare journal entries to record the transactions given above 2 Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36.000

Explanation / Answer

Solution 1:

Solution 2:

Journal Enteries - Polaris Company S. No General Journal Debit Credit 1 Raw Material Inventory Dr $209,000.00          To Accounts Payable $209,000.00 (Raw material purchased on account) 2 Work In Process Dr $152,000.00 Manufacturing Overhead Dr $38,000.00          To Raw Material Inventory $190,000.00 (Being Raw material used in production) 3 Work In Process Dr $49,000.00 Manufacturing Overhead Dr $21,000.00          To Wages Payable $70,000.00 (Being labor cost accrued) 4 Manufacturing overhead Dr $105,000.00          To Accumulated depreciation - Factory Equipment $105,000.00 (Being depreciation charged on factory equipment) 5 Manufacturing overhead Dr $129,000.00          To Accounts Payable $129,000.00 (Being other manufacturing overhead cost incurred) 6 Work In Process Dr (76100 * $6) $456,600.00          To Manufacturing overhead $456,600.00 (Being manufacturing overhead applied to prodcution) 7 Finished Goods Inventory Dr $513,000.00          To Work In Process $513,000.00 (Being cost of completed goods transferred to finished goods) 8 Cost of goods sold Dr $449,000.00          To Finished Goods Inventory $449,000.00 (Being cost of unit sold transferred to COGS) 9 Accounts Receivables Dr $583,700.00          To Sales Revenue $583,700.00 (To record sales on account)

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