Widmer Watercraft\'s predetermined overhead rate for the year 2017 is 200% of di

Question

Widmer Watercraft's predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company's production activities during May 2017 follows. a. Purchased raw materials on credit, $240,000. b. Materials requistions record use of the following materials for the month. Job 136 Job 137 Job 138 Job 139 Job 140 Total direct materials Indirect materials Total materials used $ 49,000 33,000 20,000 23,000 7,400 132,400 20,000 $152,400 c. Paid $16,000 cash to a computer consultant to reprogram factory equipment. d. Time tickets record use of the following labor for the month. These wages were paid in cash. Job 136 Job 137 Job 138 Job 139 Job 140 Total direct labor Indirect labor Total $ 12,000 10,700 37,700 39,400 3,200 103,000 25,000 $128,000 e. Applied overhead to Jobs 136, 138, and 139 f. Transferred Jobs 136, 138, and 139 to Finished Goods g. Sold Jobs 136 and 138 on credit at a total price of $540,000.

Explanation / Answer

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No. Transaction General Journal Debit Credit 1 a. Raw materials inventory 240000 Accounts payable 240000 (To record raw materials purchased on credit) 2 b. Work in process inventory 132400 Factory overhead 20000 Raw materials inventory 152400 (To record raw materials requisitioned) 3 c. Factory overhead 16000 Cash 16000 (To record factory overheads paid) 4 d. Work in process inventory 103000 Factory overhead 25000 Cash 128000 (To record payment of factory payroll) 5 e. Work in process inventory ($24000+$75400+$78800) 178200 Factory overhead 178200 (To record factory overheads applied) 6 f. Finished goods inventory ($85000+$133100+$141200) 359300 Work in process inventory 359300 (To record jobs transferred to finished goods) 7 g. Accounts receivable 540000 Sales revenue 540000 (To record jobs sold on credit) 8 g. Cost of goods sold ($85000+$133100) 218100 Finished goods inventory 218100 (To record cost of sales) 9 h. Factory overhead 153500 Accumulated depreciation-factory building 69000 Accumulated depreciation-factory equipment 38000 Prepaid insurance 10000 Property taxes payable 36500 (To record factory overheads incurred) 10 i. Work in process inventory ($21400+$6400) 27800 Factory overhead 27800 (To record factory overheads applied)

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