Question

Required information

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The following information is available for Lock-Tite Company, which produces special-order security products and uses a job order costing system.

	April 30				May 31
Inventories
Raw materials	$	29,000			$	52,000
Work in process		9,200				18,000
Finished goods		50,000				34,000
Activities and information for May
Raw materials purchases (paid with cash)						177,000
Factory payroll (paid with cash)						150,000
Factory overhead
Indirect materials						9,000
Indirect labor						34,500
Other overhead costs						118,000
Sales (received in cash)						1,100,000
Predetermined overhead rate based on direct labor cost						55	%

1. Direct labor usage.
2. Indirect labor usage.
3. Total payroll paid in cash.

Prepare journal entries for the above transactions for the month of May.

Answer 1

The following journal entry will be prepared for direct labor usage:
Transaction	General Journal	Debit	Credit
1	Work in process inventory	115500
	Factory payroll		115500
The following journal entry will be prepared for indirect labor usage:
Transaction	General Journal	Debit	Credit
2	Factory overhead	34500
	Factory payroll		34500
The following journal entry will be prepared for total payroll paid in cash:
Transaction	General Journal	Debit	Credit
3	Factory payroll	150000
	Cash		150000