Question

Journal Entries, Job Costs The following transactions occurred during the month of April for Olakala Company:...

Journal Entries, Job Costs

The following transactions occurred during the month of April for Olakala Company:

  1. Purchased materials costing $3,000 on account.
  2. Requisitioned materials totalling $1,700 for use in production: $500 for Job 443 and the remainder for Job 444.
  3. Recorded 50 hours of direct labour on Job 443 and 100 hours on Job 444 for the month. Direct labourers are paid at the rate of $8 per hour.
  4. Applied overhead using a plantwide rate of $7.50 per direct labour hour.
  5. Incurred and paid in cash actual overhead for the month of $1,230.
  6. Completed and transferred Job 443 to Finished Goods.
  7. Sold on account Job 442, which had been completed and transferred to Finished Goods in March, for cost ($2,000) plus 25 percent.

Required:

1. Prepare journal entries for transactions (a) through (e).

a. Raw Materials      
Accounts Payable
b. Work in Process
Raw Materials
c. Work in Process
Raw Materials
d. Work in Process
Overhead Control
e. Overhead Control
Cash

2. Prepare job-order cost sheets for Jobs 443 and 444.

Olakala Company
Job Order Cost Sheets
For the Month of January
Job 443 Job 444
Direct materials $ $   
Direct labour
Applied overhead
Total $ $

Prepare journal entries for transactions (f) and (g).

f.      
g. Cost
Sale

3. Prepare a statement of cost of goods manufactured for April. Assume that the beginning balance in the Raw Materials account was $1,400 and that the beginning balance in the Work in Process account was zero. If the amount box does not require an entry, enter "0".

Olakala Company
Schedule of Cost of Goods Manufactured
For the Month Ended April 30
Direct materials:
$
$
$
$
$
$
$
0 0
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Answer #1

1.

a. Raw Materials 3000   
Accounts Payable 3000
b. Work in Process 1700
Raw Materials 1700
c. Work in Process 1200[150hours*8]
Raw Materials 1200
d. Work in Process 1125[150*7.5]
Overhead Control 1125
e. Overhead Control 1230
Cash 1230

2

Olakala Company
Job Order Cost Sheets
For the Month of January
Job 443 Job 444
Direct materials $500 $1200[1700-500]
Direct labor $400[50*8] $800[100*8]
Applied overhead $375[50*7.5] $750[100*7.5]
Total $1275 $2750

Prepare journal entries for transactions (f) and (g).

f. finished goods 1275
work in process 1275
g. cost of goods sold 2000
finished goods 2000
Sale account receivable 2500
sales revenue 2500

2000+25%=2500

4.schedule of cost of goods manufactured

Olakala Company
Schedule of Cost of Goods Manufactured
For the Month Ended April 30
Direct materials:
beginning raw material inventory $1400
purchase of raw material 3000
Total raw material available $4400
ending raw material $2700
Raw material used $1700
direct labor 1200
overhead applied $1125
Total manufacturing cost $4025
Add beginning work in process 0
Total $4025
Less:
ending work in process (Job 444) $2750
cost of goods manufactured [4025-2750] $1275
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