A selected list of accounts used by Sloan Manufacturing Company follows:
B Accounts Receivable
C Raw Materials Inventory
D Work In Process Inventory
E Finished Goods Inventory
F Accounts Payable
G Factory Labor
H Manufacturing Overhead
I Cost of Goods Sold
Sloan Manufacturing Company uses a job order system and maintains perpetual inventory records.
Place the appropriate code letter in the columns indicating the appropriate account(s) to be debited and credited for the transactions listed below.
Transactions Debited Credited
1. Raw materials were purchased on account.
2. Issued a check to Estes Machine Shop for
repair work on factory equipment.
3. Direct materials were requisitioned for Job 280.
4. Factory labor was paid as incurred.
5. Recognized direct labor and indirect labor used.
6. The production department requisitioned indirect
materials for use in the factory.
7. Overhead was applied to production based on a
predetermined overhead rate of $8 per labor hour.
8. Goods that were completed were transferred to
9. Goods costing $80,000 were sold for $105,000
10. Paid for raw materials purchased previously
Finn Manufacturing Company uses a job order cost accounting system and keeps perpetual inventory records. Prepare journal entries to record the following transactions during the month of June.
June 1 Purchased raw materials for $25,000 on account.
8 Raw materials requisitioned by production:
Direct materials $6,000
Indirect materials 1,000
15 Paid factory utilities, $2,100 and repairs for factory equipment, $3,000.
25 Incurred $72,000 of factory labor.
25 Time tickets indicated the following:
Direct Labor (4,000 hrs × $12 per hr) = $48,000
Indirect Labor (3,000 hrs × $8 per hr) = 24,000
Selected accounts of Kosar Manufacturing Company at year end appear below:
RAW MATERIALS INVENTORY WORK IN PROCESS INVENTORY
(a) 40,000 (d) 30,000 (d) 30,000 (g) 150,000
FINISHED GOODS INVENTORY COST OF GOODS SOLD
(g) 150,000 (h) 120,000 (h) 120,000
FACTORY LABOR MANUFACTURING OVERHEAD
(b) 110,000 (e) 95,000 (c) 75,000 (f) 90,000
Explain the probable transaction that took place for each of the items identified by letters in the accounts. For example:
(a) Raw materials costing $40,000 were purchased.
The gross earnings of factory workers for Dinkel Company during the month of January are $100,000. The employer's payroll taxes for the factory payroll are $12,000. Of the total accumu-lated cost of factory labor, 75% is related to direct labor and 25% is attributable to indirect labor.
(a) Prepare the entry to record the factory labor costs for the month of January.
(b) Prepare the entry to assign factory labor to production.
(c) Prepare the entry to assign manufacturing overhead to production, assuming the predetermined overhead rate is 125% of direct labor cost.
Butler Manufacturing uses a job order cost accounting system. On April 1, the company has Work in Process Inventory of $7,600 and two jobs in process: Job No. 221, $3,600, and Job No. 222, $4,000. During April, a summary of source documents reveals the following:
Materials Requisition Slips Labor Time Tickets
Job No. 221 $1,200 $2,600
222 1,700 1,200
223 2,400 2,900
224 2,100 2,800
General use 600 400
Totals $8,000 $9,900
Butler applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 221 is completed during the month.
(a) Prepare summary journal entries to record the raw materials requisitioned, factory labor used, the assignment of manufacturing overhead to jobs, and the completion of Job No. 221.
(b) Calculate the balance of the Work in Process Inventory account at April 30.