Question

- Inventory at the beginning of the year consisted of materials ($3500), WIP (Job 122 $7500,...

- Inventory at the beginning of the year consisted of materials ($3500), WIP (Job 122 $7500, Job 123 $4800), finished goods $11500

-Incurred manufacturing wages of $112000 (20% was direct labor for job 122, 25% direct labor of job 123 and 55% was indirect labor)

- Used in production: direct materials for Job 122,$22800, direct materials for Job 123 $27800, indirect materials $17800

- Allocated manufacturing overhead to jobs using the predetermined rate of 220% of direct labor costs.

- Completed jobs 122 and 123

- Sold 70% of job 122 on credit for $178,400

How should I journalize these entries?

Thank you

Business   Accounting   
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Answer #1

Journal entries :

Accounts Titles and explanation Debit $ Credit $
Work in process 50400
Manufacturing Overhead 61600
Labor Payroll 112000
(being the labor expenses made)
WIP 50600
Manuf. Overhead 17800
Raw Material Inventory 68400
(being material used)
WIP 110880
Manuf. Overhead 110880
(220% of DLCs= 50400 * 220% = 110880)
Finished Goods Inventory 224180
WIP 224180
(sum of opening WIP + lab, material & overhead used = 7500+4800+50400 +50600+110880)
Accounts Receivable 178400
Sales revenue 178400

(70% of Job 122 sold)
Cost of Goods Sold 71386
Finished Goods Inventory 71386
[70% of (7500+22400+22800+49280) ]
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