Olduvai Inc. uses a job-ordcr costing system. During the month of May, the follo
ID: 2426360 • Letter: O
Question
Olduvai Inc. uses a job-ordcr costing system. During the month of May, the following transac. tions occurred: Purchased materials on account for $24,550. Requisitioned materials totaling $23,130 for use in production. Of the total, $8,900 was for Job 58, $8,800 for Job 59, and the remainder for Job 60. Incurred direct labor for the month of $36,000, with an average wage of $20 per hour, job 58 used 800 hours; Job 59, 600 hours; and Job 60, 400 hours. Incurred and paid actual overhead of $17,880 (credit Various Payables). Charged overhead to production at the rate of $4.80 per direct labor hour. Completed and transferred Jobs 58 and 59 to Finished Goods. Sold Job 57 (see beginning balance of Finished Gocxls) and Job 58 to their respective dicnts on account for a price of cost plus 40 percent. Beginning balances as of May 1 were: Prepare the journal entries for transactions (a) through (g) Prepare brief job order cost sheets lor Jobs 58, 59, and 60 Calculate the ending balance of Raw Materials. Calculate the ending balance of Work in Process. Calculate the ending balance of Finished Goods.Explanation / Answer
Journal Entries
a Raw Materials $24,550
Accounts Payable $24550
b Work In Process-Job 58 $8900
Work in Process-Job 59 $8800
Work in Process-Job 60 $5430
Raw Materials $23130
c Work In Process-Job 58 $16,000
Work in Process-Job 59 $12000
Work in Process-Job 60 $8000
Wages Payable $36000
d Overhead expense $17880
Overheads payable $17880
Overhead Payable $17880
Cash $17880
e Work In process-Job 58 $3840
Work in Process-Job 59 $2880
Work in Process-Job 60 $1920
Overhead expense $8640
f Finished Goods $52420
Work in Process-Job 58 $28740
Work in Process-Job 59 $23680
g Accounts receivable $78596
sales $78596
Cost of goods sold $56140
Finished Goods $56140
3
Ending balance of Raw Materials= (2500+24550-23130)=3920
Ending Balance of Work in Process= (23130+36000+8640-52420)=15350
Ending Balance of Finished goods= (27400+52420-56140)=23680
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