The Polaris Company uses a job-order costing system. The following transactions

Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October a. Raw materials purchased on account, $211,000. b. Raw materials used in production, $192.000 ($153,600 direct materials and $38,400 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. f. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 76,200 machine-hours were used in October. g. Jobs costing $512.000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $453,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 36% above cost. Required 1. Prepare 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 $34,000. Complete this question by entering your answers in the tabs below. Required 1 Required 2 event, select "No journal entry Prepare journal entries to record the transactions given above. (If no entry is required for a trans field.)

Explanation / Answer

1 Sl No. Account titles Debit Credit a. Raw materials inventory 211000 Accounts payable 211000 (Raw material purchases on credit-Direct materials) b. Work-in-process inventory 153600 Manufacturing overhead 38400 Raw materials inventory 192000 (Requisition of direct and indirect materials) c. Work-in-process inventory 49000 Manufacturing overhead 21000 Wages payable 70000 (Direct and indirect labor accrued) d. Manufacturing overhead 105000 Accumulated depreciation 105000 (Depreciation on manufacturing equipment) e. Manufacturing overhead 129000 Accounts payable 129000 (Other factory overhead accrued) f. Work-in-process inventory 609600 Manufacturing overhead (76200*8) 609600 (Applied factory overhead) g. Finished goods inventory 512000 Work-in-process inventory 512000 (Transfer of completed jobs to finished goods) h. Accounts receivable (453000*136%) 616080 Sales 616080 (Sales on account) Cost of goods sold 453000 Finished goods inventory 453000 (Entry for cost of sales) 2 Work in process Explanation Debit Credit Bal 34000 Raw material 153600 Wages 49000 Overhead applied 609600 Finished goods 512000 846200 512000 Bal. 334200 Manufacturing overhead Explanation Debit Credit Bal 0 Raw materials inventory 38400 Wages payable 21000 Work in process inventory 609600 Accumulated depreciation 105000 Accounts payable 129000 293400 609600 Bal. 316200

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