Question

MS Company produces reproductions of antique residential moldings at a plant located in Indang, Cavite. Since there are hundreds of products, some o which are made only to order, the company uses a job-order costing system. On July 1, the start of the company's fiscal year, inventory account balances were as follows: Raw materials Work in process Finished goods Total P10,000 4,000 8,000 P22,000 The company applies overhead cost to jobs on the basis of machine-hours using the same principles followed by companies in the Philippines and elsewhere. For the fiscal year starting July, it was estimated that the plant would operate 45,000 machine-hours and incur P99,000 in factory overhead cost. During the year, the following transactions were completed: Raw materials purchased on account, P160,000. Raw materials requisitioned for use in production, P140,000 (materials costing P120,000 were chargeable directly to jobs; the remaining materials were indirect) Costs for employee services were incurred as follows a. c. Direct labor Indirect labor Sales commissions Administrative salaries P90,000 60,000 20,000 50,000 d. Prepaid insurance expired during the year, P18,000 (P13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, P10,000. f. Advertising costs incurred, P15,000. g. Depreciation recorded on equipment, P25,000. (P20,000 of this amount was on equipment used in factory operations; the remaining P5,000 was on equipment used in selling and administrative activities)

Answer 1

Requirement-1: Event General Journal Credit Remarks and Workin Debit P 160,000 a) Raw Materials Inventory Accounts Payable Work in Process Inventory Factory Overhead P 160,000 To record Raw Materials purchased on account) b) P 120,000 P 20,000 P 140,000- P120,000] Raw Materials Inventory Work in Process Inventory Factory Overhead Sales Commission Expense Administrative Salary Expense P 140,000 To record raw materials requisitioned) P 90,000 P 60,000 P 20,000 P 50,000 Wages Payable (or Cash) Factory Overhead Insurance Expense P 220,000 (To record direct and indirect labor, Sale commision & Admin. Sal.) d) P 13,000 P 5,000 [P 18,000 - P 13,000] Prepaid insurance Factory Overhead P 18,000 (To record prepaid insurance expired) P 10,000 (To record utility expense incurred in the factory) P 15,000 To record advertising expense incurred) e) P 10,000 Utility Payable (or Cash) Advertising Expense P 15,000 Accounts Payable (or Cash)