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25 May, 21:34

Prepare summary journal entries to record the following transactions for a company in its first month of operations.

a. Raw materials purchased on account, $94,000.

b. Direct materials used in production, $40,500.

c. Indirect materials used in production, $25,000.

d. Paid cash for factory payroll, $70,000.

e. Of this total, $50,000 is for direct labor and $20,000 is for indirect labor.

f. Paid cash for other actual overhead costs, $7,875.

g. Applied overhead at the rate of 125% of direct labor cost.

h. Transferred cost of jobs completed to finished goods, $74,000.

i. Sold jobs on account for $105,000. The jobs had a cost of $74,000.

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  1. 25 May, 23:39
    0
    Description Dr Cr

    a. Raw Materials $94000

    Account payable $ 94000

    b. Work In Process $ 40500

    Direct Materials $40500

    c. Work In Process $ 25000

    Indirect Materials $25000

    d. Payroll (Liabilities) $ 70000

    Cash / Bank $ 70000

    e. Direct Labor $ 50000

    Indirect labor $ 20000

    Payroll (Liabilities) $ 70000

    f. Overhead $ 7875

    Cash/bank $ 7875

    g. Work in process $ 62500

    Applied overhead (125 % $62500

    of direct cost)

    h. Finished goods $74000

    Work in Process $ 74000

    i. Account Receivable $ 105000

    Sale/Revenue $105000

    Cost of Goods sold $ 74000

    Finished Goods $ 74000

    Explanation:

    Summary of Journal entries are given below:

    a. Raw materials purchased on account, $94,000.

    Description Dr Cr

    Raw Materials $94000

    Account payable $ 94000

    b. Direct materials used in production, $40,500.

    Work In Process $ 40500

    Direct Materials $40500

    c. Indirect materials used in production, $25,000.

    Work In Process $ 25000

    d. Paid cash for factory payroll, $70,000.

    Payroll (Liabilities) $ 70000

    Cash / Bank $ 70000

    e. Of this total, $50,000 is for direct labor and $20,000 is for indirect labor.

    Direct Labor $ 50000

    Indirect labor $ 20000

    Payroll (Liabilities) $ 70000

    f. Paid cash for other actual overhead costs, $7,875.

    Overhead $ 7875

    g. Applied overhead at the rate of 125% of direct labor cost.

    Work in process $ 62500

    Applied overhead (125 % $62500

    of direct cost)

    h. Transferred cost of jobs completed to finished goods, $74,000.

    Finished goods $74000

    Work in Process $ 74000

    i. Sold jobs on account for $105,000. The jobs had a cost of $74,000.

    Account Receivable $ 105000

    Sale/Revenue $105000

    Cost of Goods sold $ 74000

    Finished Goods $ 74000
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