Question

Exercise 3-5 Journal Entries and T-accounts (L03-1, LO3-2] The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials). c. Accrued direct labor cost of $49,000 and indirect labor cost of $20,000. d. Depreciation recorded on factory equipment, $104,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,500 machine-hours were used in October. g. Jobs costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $448,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 28% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries to record the transactions given above. (If no entry is required for a transaction/event, select "No journal entry
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Answer 1

	General Journal	Debit	Credit
a	Raw material inventory	$210,000
	Accounts payable		$210,000
b	Work in process	$151,200
	Manufacturing overhead	37,800
	Raw material inventory		$189,000
c	Work in process	$49,000
	Manufacturing overhead	20,000
	Wages payable		$69,000
d	Manufacturing overhead	$104,000
	Accumulated depreciation-Equipment		$104,000
e	Manufacturing overhead	$130,000
	Accounts payable		$130,000
f	Work in process (76,500*$7)	$535,500
	Manufacturing overhead		$535,500
g	Finished goods	$511,000
	Work in process		$511,000
h	Cost of goods sold	$448,000
	Finished goods		$448,000
	Accounts receivable ($448,000+28%)	$573,440
	Sales		$573,440

2.

Manufacturing overhead				Work in Process
b.	$37,800	$535,500	f.	Beg.Bal.	$36,000	$511,000	g.
c.	20,000			b.	151,200
d.	104,000			c.	49,000
e.	130,000			f.	535,500
End.bal.		$243,700		End.bal.	$260,700