Question

Baskin Company uses a job-order costing system to manufactures large tiger cages for exotic pet owners. On January 1, the beginning of the current year, the company’s inventory balances were as follows: Raw materials $ 22,500 Work in process $ 12,600 Finished goods $ 31,300

Baskin Company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 37,300 machine-hours and incur $154,795 in manufacturing overhead cost. The following transactions were recorded for the year:
a. Raw materials were purchased on account: $226,000. b. Raw materials were requisitioned for use in production: $203,000 (85% direct and 15% indirect). c. Baskin Company used to operate solely with volunteers, but recently hired paid employees. The following costs were incurred for employee services:
Direct labour $ 170,400 Indirect labour $ 29,600 Sales commissions $ 39,900 Admin salaries $ 85,200

d. Heat, power, and water costs were incurred in the factory: $47,850. e. Depreciation was recorded for the year: $67,800 (75% relates to factory operations, and 25% relates to selling and administrative activities). f. Manufacturing overhead cost was applied to production. The company recorded 42,600 machine-hours for the year.
Required
Prepare journal entries to record the transactions for the year.

Answer 1

Journal Entries
Events	Particulars			Debit	Credit
a)	Raw Materials			$ 226,000.00
	To Accounts Payable				$ 226,000.00
b)	WIP			$ 172,550.00
	Manu. OH			$   30,450.00
	To Raw Materials				$ 203,000.00
c)	WIP			$ 170,400.00
	Manu. OH			$   29,600.00
	Sales Commissions			$   39,900.00
	Salaries Expense			$   85,200.00
	To Salaries Payable				$ 325,100.00
d)	Manu. OH			$   47,850.00
	To Accounts Payable				$   47,850.00
e)	Manu. OH			$   50,850.00
	Depreciation Expense			$   16,950.00
	To Accu. Depreciation				$   67,800.00
f)	WIP			$ 176,790.00
	To Manu. OH				$ 176,790.00
	($ 154795 x 42600 / 37300)