Question

Torn Baker manufactures custom teakwood patio furniture. Suppose Baker has the following transactions: a. Purchased raw...

Torn Baker manufactures custom teakwood patio furniture. Suppose Baker has the

following transactions:

a. Purchased raw materials on account,             $135,000.

b. Materials costing $130,000 were requisitioned (used) for production. Of .this total, $30,000 were indirect materials.·

c. Labor records show that direct labor of $22,000 and indirect labor of $5,000 were incurred (but not yet paid).

d. Assigned labor cost to work in process and manufacturing overhead.

Requirement     

  1. Prepare journal entries for each transaction. Then explain each journal entry in terms of what got increased and what got decreased.
Business   Accounting   
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Answer #1
Journal entries:
Accounting equation
Ref. Account titles and explanation Debit Credit Asset Liabilities Equity
a. Raw materials inventory 135000 +
Accounts payable 135000 +
(Purchased raw materials on account)
b. Work in process inventory (130000-30000) 100000 +
Manufacturing overhead 30000 -
Raw materials inventory 130000 -
(Materials issued)
c. Wages expense (22000+5000) 27000 -
Wages payable 27000 +
(Labor cost incurred)
d. Work in process inventory 22000 +
Manufacturing overhead 5000 -
Wages expense 27000 +
( Assigned labor cost)
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