Exercise 15-5 Manufacturing cost flows LO P1, P2, P3 Custom Cabinetry has one jo

Question

Exercise 15-5 Manufacturing cost flows LO P1, P2, P3 Custom Cabinetry has one job in process (Job 120) as of June 30, at that time, its job cost sheet reports direct materials of $7,500, direct labor of $4,300, and applied overhead of $3.655. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost During July. Job 120 is sold (on account) for $25,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July Job 120 Job 122 July Product Costs Total 121 Direct materials $1,900 $6,200 $3,900 $12,000 Direçt labor overhead applied 3,100 4,400 3,900 11,400 1. Prepare journal entries for the following in July. a. Direct materials used in production. b. Direct labor used in production. d. The sale of Job 120 e. Cost of goods sold for Job 120. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30) Complete this question by entering your answers in the t abs below ??

Explanation / Answer

Requirement 1:

Journal entry worksheet

Transaction

General Journal

Debit ($)

Credit ($)

a.

Production cost:

Job 120

1900

Job 121

6200

Job 122

3900

Raw materials

12000

(Being raw materials used in production)

b.

Production cost:

Job 120

3100

Job 121

4400

Job 122

3900

Direct labour

11400

(Being direct labour used in production)

c.

Production cost:

Job 120 (3100 x 85%)

2635

Job 121 (4400 x 85%)

3740

Job 122 (3900 x 85%)

3315

Direct overhead

9690

(Being direct overhead used in production)

d.

Bank

25000

Sales

25000

(Being job 120 sold in cash)

e.

Cost of goods sold

23090

Work in progress (Opening)

Direct materials

7500

Direct labour

4300

Direct overhead

3655

Production costs (1900 + 3100 + 2635)

7635

(Being cost of goods sold)

Requirement 2:

Job 121

Work in process

Finished goods

Direct materials

6200

Direct labour

4400

Overhead

3740

14340

Job 122

Work in process

Finished goods

Direct materials

3900

Direct labour

3900

Overhead

3315

11115

Journal entry worksheet

Transaction

General Journal

Debit ($)

Credit ($)

a.

Production cost:

Job 120

1900

Job 121

6200

Job 122

3900

Raw materials

12000

(Being raw materials used in production)

b.

Production cost:

Job 120

3100

Job 121

4400

Job 122

3900

Direct labour

11400

(Being direct labour used in production)

c.

Production cost:

Job 120 (3100 x 85%)

2635

Job 121 (4400 x 85%)

3740

Job 122 (3900 x 85%)

3315

Direct overhead

9690

(Being direct overhead used in production)

d.

Bank

25000

Sales

25000

(Being job 120 sold in cash)

e.

Cost of goods sold

23090

Work in progress (Opening)

Direct materials

7500

Direct labour

4300

Direct overhead

3655

Production costs (1900 + 3100 + 2635)

7635

(Being cost of goods sold)

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