Question

Entries for Costs in a Job Order Cost System

Royal Technology Company uses a job order cost system. The following data summarize the operations related to production for March:

1. Materials purchased on account, $770,000.
2. Materials requisitioned, $680,000, of which $75,800 was for general factory use.
3. Factory labor used, $756,000, of which $182,000 was indirect.
4. Other costs incurred on account for factory overhead, $245,000; selling expenses, $171,500; and administrative expenses, $110,600.
5. Prepaid expenses expired for factory overhead were $24,500; for selling expenses, $28,420; and for administrative expenses, $16,660.
6. Depreciation of factory equipment was $49,500; of office equipment, $61,800; and of office building, $14,900.
7. Factory overhead costs applied to jobs, $568,500.
8. Jobs completed, $1,500,000.
9. Cost of goods sold, $1,375,000.

Required:

Journalize the entries to record the summarized operations. For a compound transaction, if an amount box does not require an entry, leave it blank.

a. Materials purchased on account, $770,000.

Entry	Description	Debit	Credit
a.

b. Materials requisitioned, $680,000, of which $75,800 was for general factory use.

Entry	Description	Debit	Credit
b.

c. Factory labor used, $756,000, of which $182,000 was indirect.

Entry	Description	Debit	Credit
c.

d. Other costs incurred on account for factory overhead, $245,000; selling expenses, $171,500; and administrative expenses, $110,600.

Entry	Description	Debit	Credit
d.

e. Prepaid expenses expired for factory overhead were $24,500; for selling expenses, $28,420; and for administrative expenses, $16,660.

Entry	Description	Debit	Credit
e.

f. Depreciation of factory equipment was $49,500; of office equipment, $61,800; and of office building, $14,900.

Entry	Description	Debit	Credit
f.

g. Factory overhead costs applied to jobs, $568,500.

Entry	Description	Debit	Credit
g.

h. Jobs completed, $1,500,000.

Entry	Description	Debit	Credit
h.

i. Cost of goods sold, $1,375,000.

Entry	Description	Debit	Credit
i.

Answer 1

Solution:

Journal Entries - Royal Technology Company
Event	Particulars	Debit	Credit
a	Raw material inventory Dr	$770,000.00
	To Accounts Payable		$770,000.00
	(To record purchase of raw material)
b	Work In Process Dr	$604,200.00
	Factory overhead Dr	$75,800.00
	To Raw material inventory		$680,000.00
	(To record raw material used in production)
c	Work In Process Dr	$574,000.00
	Factory overhead Dr	$182,000.00
	To Factory wages		$756,000.00
	(To record use of factory wages)
d	Factory overhead Dr	$245,000.00
	Selling expenses Dr	$171,500.00
	Adminsitrative expenses Dr	$110,600.00
	To Various account		$527,100.00
	(To record overhead incurred)
e	Factory overhead Dr	$24,500.00
	Selling expenses Dr	$28,420.00
	Adminsitrative expenses Dr	$16,660.00
	To Prepaid expenses		$69,580.00
	(To record prepaid expense expired)
f	Factory overhead Dr	$49,500.00
	Depreciation expense - Office Equipment Dr	$61,800.00
	Depreciation expense - Office Building Dr	$14,900.00
	To Accumulated depreciation		$126,200.00
	(To record depreciation)
g	Work In Process Dr	$568,500.00
	To Factory Overhead		$568,500.00
	(To apply overhead to production)
h	Finished goods inventory Dr	$1,500,000.00
	To Work In Process		$1,500,000.00
	(Being completed jobs transferred to finished goods)
i	Cost of goods sold Dr	$1,375,000.00
	To Finished goods inventory		$1,375,000.00
	(To record cost of goods sold)