Larned Corporation recorded the following transactions for the just completed month. $86,000 in raw materials were purchased on account. $84,000 in raw materials were used in production. Of this amount, $70,000 was for direct materials and the remainder was for indirect materials. Total labor wages of $120,000 were paid in cash. Of this amount, $102,100 was for direct labor and the remainder was for indirect labor. Depreciation of $190,000 was incurred on factory equipment.

Required:

Record the above transactions in journal entries.

Answer and Explanation:

The Journal entries are shown below:-

1. Raw materials inventory Dr, $86,000

To Accounts payable $86,000

(Being raw material is recorded)

Here we debited the raw material inventory as it increased the assets and we credited the accounts payable as it also increase the liabilities

2. Work in process inventory Dr, $70,000

Manufacturing overhead Dr, $14,000

To Raw materials inventory $84,000

(Being raw material inventory is recorded)

Here we debited the work in process inventory and manufacturing overhead as it increased the assets and expenses and we credited the raw material inventory as decrease the assets.

3. Work in process inventory Dr, $102,100

Manufacturing overhead Dr, $17,900

To Cash $120,000

(Being cash paid is recorded)

Here we debited the work in process inventory and manufacturing overhead as it increased the assets and expenses and we credited the cash as decrease the assets.

4. Manufacturing overhead Dr, $190,000

Accumulated depreciation-Equipment $190,000

(Being manufacturing overhead is recorded)

Here we debited the manufacturing overhead as it increase the expenses and we credited the accumulated depreciation-equipment as decrease the assets.