Question

On March 31, 2017, Alpha Corporation recorded the following factory overhead costs incurred: Factory Manager Salary $7,000 Factory Utilities 3,500 Machinery Deprecation 10,000 Machinery Repairs 2,500 Indirect materials 2,000 The overhead application rate is based on direct labor hours. The preset formula for overhead application estimated that $24,000 would be incurred, and 10,000 direct labor hours would be worked. During March, 7,100 hours were actually worked on Job Order A-2 and 2,600 hours were actually worked on Job Order A-3. Use this information to prepare the March 31 General Journal entry to record the factory overhead costs. (round any final dollar answers to the nearest whole dollar):
1. to record the factory overhead costs
2. the allocation of factory overhead to job order A-2
3. the allocation of factory overhead to job order A-3
4. the adjusting entry to dispose of any over or under application of factory overhead

Answer 1

Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
1	Factory Overheads Dr.				25000
	Accumulated dep-Machinery equipment					10000
	Salaries payable					7000
	Raw material inventory					2000
	Utilities payable					3500
	Accounts payable					2500
2	Work in process inventory -Job A2Dr.				17040
	Factory Overheads (7100 hours @ 2.40)					17040
3	Work in process inventory-Job A3 Dr.				6240
	Factory overheads (2600 hours @2.40)					6240
4	Cost of goods sold Dr.				1720
	Factory overheads (25000-23280)					1720