Question

Tybee Industries Inc. uses a job order cost system. The following data summarize the operations related to production for January, the first month of operations:

	a. Materials purchased on account, $29,800.
	b. Materials requisitioned and factory labor used:

Job	Materials	Factory Labor
301	$ 2,960	$2,775
302	3,620	3,750
303	2,400	1,875
304	8,100	6,860
305	5,100	5,250
306	3,750	3,340
For general factory use	1,080	4,100

	c. Factory overhead costs incurred on account, $5,500.
	d. Depreciation of machinery and equipment, $1,980.
	e. The factory overhead rate is $54 per machine hour. Machine hours used:

Job	Machine Hours
301	25
302	36
303	30
304	72
305	40
306	25
Total	228

	f. Jobs completed: 301, 302, 303 and 305.
	g. Jobs were shipped and customers were billed as follows: Job 301, $8,250; Job 302, $11,200; Job 303, $15,000.

Required:

1.

Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on January 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles.

2.

Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.

3.

Prepare a schedule of unfinished jobs to support the balance in the work in process account.*

4.

Prepare a schedule of completed jobs on hand to support the balance in the finished goods account.*

*Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries.

CHART OF ACCOUNTS

Tybee Industries Inc.

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
131	Materials
132	Work in Process
133	Factory Overhead
134	Finished Goods
141	Supplies
142	Prepaid Insurance
143	Prepaid Expenses
181	Land
191	Machinery and Equipment
192	Accumulated Depreciation-Machinery and Equipment

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
241	Lease Payable
251	Wages Payable
252	Consultant Fees Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
520	Wages Expense
531	Selling Expenses
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
540	Administrative Expenses
561	Depreciation Expense-Machinery and Equipment
590	Miscellaneous Expense
710	Interest Expense

1. Journalize the entries to record the summarized operations. Record each item (items a-f) as an individual entry on January 31. Record item g as 2 entries. Refer to the Chart of Accounts for exact wording of account titles.

2. Post the appropriate entries to T accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes. Insert memo account balances as of the end of the month.

Work in Process
Bal.

Finished Goods
Bal.

3. Prepare a schedule of unfinished jobs to support the balance in the work in process account. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries.

Tybee Industries Inc.

Schedule of Unfinished Jobs

1	Job	Direct Materials	Direct Labor	Factory Overhead	Total
2
3
4	Balance of Work in Process, January 30

4. Prepare a schedule of completed jobs on hand to support the balance in the finished goods account. Refer to the list of Amount Descriptions list for the exact wording of the answer choices for text entries.

Tybee Industries Inc.

Schedule of Completed Jobs

1	Job	Direct Materials	Direct Labor	Factory Overhead	Total
2

Answer 1

Solution:

1.) Journal Entries:

No.	Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
1.	Mar.31 a.	Materials		29,800
		Accounts payable			29,800
		(Record materials purchased)
2.	Mar.31 b.	Work in process		49,780
		Factory overhead		51,80
		Materials			27,010
		Wages payable			27,950
		(Record materials requisition and factory overhead)
3.	Mar.31 c.	Factory overhead		5,500
		Accounts payable			5,500
		(Record factory overhead costs on account)
4.	Mar.31 d.	Factory overhead		1,980
		Accumulated depreciation - machinery and equipment			1,980
		(Record depreciation on account)
5.	Mar.31 e.	Work in process		12,312
		Factory overhead ($54 ×228 hrs.)			12,312
		(Record overhead applied to job)
6.	Mar.31 f.	Finished goods		34,804
		Work in process			34,804
		(Record completion of jobs)
7.	Mar.31 g1	Accounts receivable		34,450
		Sales revenue			34,450
		( Record sales on account)
8.	Mar.31 g2	Cost of goods sold		22,294
		Finished goods			22,294
		(Record the cost of goods sold)

Explanation:

1.)	Work in process	$2,960+$3,620+$2,400+$8,100+$5,100+$3,750+$2,775+$3,750+$1,875+$6,860+$5,250+$3,340 =$49,780
2.	Factory overhead	$4100+$1,080 = $5,180
3.)	Accounts Receivable	$8,250+ $11,200+$15,000 =$34,450
4.)	Cost of sales	$7,085+$9,314+$5,895 =$22,294

2.) T - accounts

Work in process
b.	49,780	f.	34804
e.	$12,312
Bal.	27288

Finished goods
f.	34804	g.	22294
Bal.	12510

3.) Schedule of unfinished jobs:

Job	Direct Materials	Direct labor	Factory overhead	Total
No. 304	8100	6860	3888($54 × 72)	18848
No. 306	3750	3340	1350($54 × 25)	8440
Total	11850	10200	5238	27,288

4.) Schedule of completed jobs:

Job	Direct Materials	Direct labor	Factory overhead	Total
No. 305	5,100	5,250	2,160($54 × 40)	12,510

* If you have any query regarding this question, please ask me.