P2-3A Prepare entries for a job order cost system and cost of goods manufactured
ID: 2561249 • Letter: P
Question
P2-3A Prepare entries for a job order cost system and cost of goods manufactured schedule Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2017, the general ledger for Case Inc. contains the following data. Raw Materials Inventory $4,200 Manufacturing Overhead Applied $32,640 Work in Process Inventory $5,540 Manufacturing Overhead Incurred $31,650 Subsidiary data for Work in Process Inventory on June 1 are as follows. Job Cost Sheets Customer Job Cost Element Rodgers Stevens Linton Direct materials $600 $800 $900 Direct labor 320 540 580 Manufacturing overhead 400 675 725 $1,320 $2,015 $2,205 During June, raw materials purchased on account were $4,900, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $900 and miscellaneous costs of $400 incurred on account. A summary of materials requisition slips and time tickets for June show the following. Customer Job Materials Requisition slips Time tickets Rodgers $800 $850 Koss 2,000 800 Stevens 500 360 Linton 1,300 1,200 Rodgers 300 390 4,900 3,600 General use 1,500 1,200 $6,400 $4,800 Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labor cost. The patios for customers Rodgers, Stevens, and Linton were completed during June and sold for a total of $18,900. Each customer paid in full. Instructions (a) Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (2) assignment of direct materials, labor, and overhead to production; and (3) completion of jobs and sale of goods. (b) Post the entries to Work in Process Inventory. (c ) Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs. (d) Prepare a cost of goods manufactured schedule for June. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . After you have completed P2-3A, consider the following additional question. 1. Assume that indirect labor and raw materials purchases changed to $1,400 and $6,800 respectively. Also assume that overhead is applied at the rate of $1.50 per dollar of direct labor. The three completed jobs were sold for $22,000 cash. Revise the journal entries to reflect these changes. P2-3A Prepare entries for a job order cost system and cost of goods manufactured schedule Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2017, the general ledger for Case Inc. contains the following data. Raw Materials Inventory $4,200 Manufacturing Overhead Applied $32,640 Work in Process Inventory $5,540 Manufacturing Overhead Incurred $31,650 Subsidiary data for Work in Process Inventory on June 1 are as follows. Job Cost Sheets Customer Job Cost Element Rodgers Stevens Linton Direct materials $600 $800 $900 Direct labor 320 540 580 Manufacturing overhead 400 675 725 $1,320 $2,015 $2,205 During June, raw materials purchased on account were $4,900, and all wages were paid. Additional overhead costs consisted of depreciation on equipment $900 and miscellaneous costs of $400 incurred on account. A summary of materials requisition slips and time tickets for June show the following. Customer Job Materials Requisition slips Time tickets Rodgers $800 $850 Koss 2,000 800 Stevens 500 360 Linton 1,300 1,200 Rodgers 300 390 4,900 3,600 General use 1,500 1,200 $6,400 $4,800 Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labor cost. The patios for customers Rodgers, Stevens, and Linton were completed during June and sold for a total of $18,900. Each customer paid in full. Instructions (a) Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred, and manufacturing overhead costs incurred; (2) assignment of direct materials, labor, and overhead to production; and (3) completion of jobs and sale of goods. (b) Post the entries to Work in Process Inventory. (c ) Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs. (d) Prepare a cost of goods manufactured schedule for June. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .Explanation / Answer
Answer P2-3A
Dr. Stores Ledger Control Account 4,900
Cr. Creditors Control Account 4,900
Factory Labor Cost Incurred
Dr. Factory Labor Cost Control Account 3,600
Cr. Factory Labor Cost Accrued Account 3,600
Dr. Factory Labor Cost Accrued Account 3,600
Cr. Cash/Bank 3,600
Manufacturing Cost Incurred
Dr. Manufacturing Overhead Control Account 5,800
Cr. Manufacturing Overhead Incurred Account 4,500
Cr. Depreciation Account 900
Cr. Miscellaneous Cost Account 400
2) Assignment of Direct Materials, Labor & Overhead to Production
Issue of Direct Material to Production
Dr. Work in Progress control Account 4,900
Cr. Stores Ledger Control Account 4,900
Issue of Labor to Production
Dr. Work in Progress control Account 3,600
Cr. Factory Labor Cost Control Account 3,600
Issue of Overhead to Production
Dr. Work in Progress control Account 5,800
Cr. Manufacturing Overhead Control Account 5,800
3) Completion of jobs and sale of goods
Dr. Finished Goods Stock Account 16,040
Cr. Work in Progress control account 10,500
Cr. Work in Progress Inventory account 5,540
Dr. Cash/Bank Account 18,900
Cr. Sales Account 18,900
Dr. Work in Progress Inventory control account 3800
Cr. Work in Progress control account 3800
Total in Work in Progress Account (Debit Entries) = 14,300
Less : Work in Progress Account (Credit Entries) = (10,500)
Work in Progress Inventory = 3,800
Cost of Unfinished Goods = Cost of Koss’s job = Direct Material issued cost +Labor Cost + Manufacturing Overhead ( Labor Cost * 1.25)
= 2000 + 800 +1000
= 3,800
Total Cost of Work in Progress for Rodger, Steven &Linton = 10,500
Add: Work in Progress Inventory on 1 june = 5,540
Cost of goods sold = 16,040
Rodgers = WIP Inventory + Direct Material + Time Ticket + Manufacturing OH
= 1320+ 1100 + 1240 + 1550 = 5210
Steven = 2015 + 500 + 360 + 450 = 3325
Linton = 2205 + 1300 + 1200 + 1500 = 6205
Add : Drepreciation & Misc Cost = 1300
Cost of goods sold = 16040
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