4. Exercise 163 Finn Manufacturing Company uses a job order cost accounting syst

Question

4. Exercise 163 Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. June 1 Purchased raw materials for $20,000 on account. 8 Raw materials requisitioned by production: Direct materials Indirect materials $8,000 1,000 15 Paid factory utilities, $2,100 and repairs for factory equipment, $8,000 25 Incurred $108,000 of factory labor 25 Time tickets indicated the following Direct Labor (7,000 hrs x $12 per hr)- $84,000 Indirect Labor (3,000 hrs x $8 per hr)24,000 $108,000 25 Applied manufacturing overhead to production based on a predetermined overhead rate of $7 per direct labor hour worked 28 30 Goods costing $18,000 were completed in the factory and were transferred to finished goods. Goods costing $15,000 were sold for $20,000 on account. Prepare journal entries to record the above transactions during the month of June.(Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

25

Factory Labour …..Dr

108000

     To Cash

108000

( Being Factory Labour cost Incurred)

25

Direct Labour ……Dr

84000

Indirect Labour….Dr

24000

      To Factory Labour

108000

( Being factory Labour assigned to Direct & Indirect)

25

Production Overhead ….Dr

(7*7000)

49000

   To Manufacturing Overhead

49000

( Being Manufacturing Overhead applied to Production Overhead)

28

Finished Goods ….Dr

18000

     To Production Overhead

18000

30

Cost of Goods Sold….Dr

15000

    To Finished Goods

15000

25

Factory Labour …..Dr

108000

     To Cash

108000

( Being Factory Labour cost Incurred)

25

Direct Labour ……Dr

84000

Indirect Labour….Dr

24000

      To Factory Labour

108000

( Being factory Labour assigned to Direct & Indirect)

25

Production Overhead ….Dr

(7*7000)

49000

   To Manufacturing Overhead

49000

( Being Manufacturing Overhead applied to Production Overhead)

28

Finished Goods ….Dr

18000

     To Production Overhead

18000

30

Cost of Goods Sold….Dr

15000

    To Finished Goods

15000

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