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30 June, 08:12

Crawford Corporation incurred the following transactions. 1. Purchased raw materials on account $53,000.2. Raw Materials of $41,800 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $8,700 was classified as indirect materials. 3. Factory labor costs incurred were $60,500, of which $50,600 pertained to factory wages payable and $9,900 pertained to employer payroll taxes payable. 4. Time tickets indicated that $54,800 was direct labor and $5,700 was indirect labor. 5. Manufacturing overhead costs incurred on account were $84,800.6. Depreciation on the company's office building was $9,000.7. Manufacturing overhead was applied at the rate of 160% of direct labor cost. 8. Goods costing $94,200 were completed and transferred to finished goods. 9. Finished goods costing $78,200 to manufacture were sold on account for $109,000. Journalize the transactions.

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  1. 30 June, 10:31
    0
    1.

    Raw Materials $53,000 (debit)

    Account Payable $53,000 (credit)

    2.

    Work In Process : Direct Materials $33,100 (debit)

    Work In Process : Indirect Materials $ 8,700 (debit)

    Raw Materials $41,800 (credit)

    3.

    Salaries Expenses $60,500 (debit)

    Salaries and Wages Payable $60,500 (credit)

    4.

    Work In Process : Direct Labor $54,800 (debit)

    Work In Process : Indirect Labor $5,700 (debit)

    Salaries Expense $60,500 (credit)

    5.

    Overheads Expenses $84,800 (debit)

    Trade Payable $84,800 (credit)

    6.

    Depreciation - Office Building $9,000 (debit)

    Accumulated Depreciation - Office Building $9,000 (credit)

    7.

    Work In Process $87,680 (debit)

    Overheads $87,680 (credit)

    8.

    Finished Goods $94,200 (debit)

    Work In Process $94,200 (credit)

    9.

    J1

    Cost of Goods Sold $78,200 (debit)

    Finished Goods $78,200 (credit)

    J2

    Trade Receivable $109,000 (debit)

    Revenue $109,000 (credit)

    Explanation:

    The Manufacturing Costs accumulate in the Work In Process Account during manufacture.

    The Costs is de-recognized from Work In Process Account to Finished Goods Account on transfer to Finished Goods.

    The Costs are then de-recognized from Finished Goods to Cost of Sales on Sale to Customers.

    Calculation of Overhead Applied:

    Overhead = $54,800 * 160% = $87,680.
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