The following transactions occurred in during the month of January: a) Purchased

Question

The following transactions occurred in during the month of January:

a) Purchased $10,000 of raw materials on account

b) Requisitioned $8,000 of materials for Jobs 101-105

c) Requisitioned $500 of materials for general factory use

d) Paid factory workers wages $7,500

e) Paid factory supervisor salary of $1,500

f) Paid factory rent and utilities of $4,000

g) Applied factory overhead: predetermined rate is $50 per direct labor hour. January Direct Labor hours = 100

h) Completed jobs 101 and 102 – total product cost of $2,250

i) Sold job 101 which had product costs of $1,200 for $3,800

Explanation / Answer

DR CR a Raw and in process inventory 10000 Account Payable 10000 b No entry Required c No entry Required d Raw and in process inventory 7500 Conversion Cost 7500 (Direct labor) e No entry Required f No entry Required g Raw and in process inventory 5000 Conversion Cost 5000 h Finished Goods 2250 Raw and in process inventory 2250 I Account Receivables 3800 Sales 3800 j Cost of Goods Sold 1200 Finished Goods 1200

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