Degelman Company uses a job order cost system and applies overhead to production

Question

Degelman Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2014, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $21,600, direct labor $12,960, and manufacturing overhead $17,280. As of January 1, Job No. 49 had been completed at a cost of $97,200 and was part of finished goods inventory. There was a $16,200 balance in the Raw Materials Inventory account.

During the month of January, Deglman Manufacturing began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $131,760 and $170,640, respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $97,200 on account.
2. Incurred factory labor costs of $75,600. Of this amount $17,280 related to employer payroll taxes.
3. Incurred manufacturing overhead costs as follows: indirect materials $18,360; indirect labor $21,600; depreciation expense on equipment $20,520; and various other manufacturing overhead costs on account $17,280.
4. Assigned direct materials and direct labor to jobs as follows.

Job No. Direct Materials Direct Labor
50 $10,800 $5,400
51 42,120 27,000
52 32,400 21,600


Question:
1. Prepare the journal entry (or entries) to record the sale of any job(s) during the month.

Explanation / Answer

1. Debit(D): Raw Materials Inventory 97,200 Credit(C): Account Payable 97,200 2. D: Work-In-Progress Inventory 75,600 C: Wages Payable 58,320 C: Tax Payable 17,280 3. D: Factory Overhead-Indirect Materials 18,360 C: Raw Materials Inventory 18,360 D: Factory Overhead-Indirect Labor 21,600 C: Wages Payable 21,600 D: Depreciation Expenses 20,520 C: Accumulated Depreciation-Equipment 20,520 D: Factory Overhead 17,280 C: Account Payable 17,280 4. D: Work-In-Progress Inventory 85,320 C: Raw Material Inventory 85,320

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