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5 May, 05:05

Exercise 15-6 Recording events in job order costing LO P1, P2, P3, P4 Prepare summary journal entries to record the following transactions for a company in its first month of operations. Raw materials purchased on account, $94,000. Direct materials used in production, $40,500. Indirect materials used in production, $25,000. Paid cash for factory payroll, $70,000. Of this total, $50,000 is for direct labor and $20,000 is for indirect labor. Paid cash for other actual overhead costs, $7,875. Applied overhead at the rate of 125% of direct labor cost. Transferred cost of jobs completed to finished goods, $74,000. Sold jobs on account for $105,000 g (2). The jobs had a cost of $74,000 g (1).

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  1. 5 May, 08:13
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    The journal entries are shown below:

    Explanation:

    The journal entries are as follows

    a. Raw materials A/c Dr $94,000

    To Accounts payable A/c $94,000

    (Being the raw material is purchased on account is recorded)

    b. Work in process inventory Dr $40,500

    Factory overhead Dr $25,000

    To Raw material $65,500

    (Being the raw material is recorded)

    c. Work in process Dr $50,000

    Factory overhead Dr$20,000

    To cash $70,000

    (Being the cash is paid is recorded)

    d. Factory overhead Dr$7,875

    To Cash $7,875

    (Being cash is paid is recorded)

    e. Work in process Dr $62,500 ($50,000 * 125%)

    To factory overhead $62,500

    (Being the applied overhead is recorded)

    f. Finished goods Dr $74,000

    To work in process $74,000

    (Being the transferred goods is recorded)

    g. Accounts receivables Dr$105,000

    To sale $105,000

    (Being the sales revenue is recorded)

    g. 1 Cost of goods sold Dr $74,000

    To finished goods $74,000

    (Being the cost is recorded)
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