Question

he Polaris Company uses a job-order costing system. The following transactions occurred in October:

The Polaris Company uses a job-order costing system. The following transactions occurred in October a. Raw materials purchased on account, $209,000. 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 $21,000 d. Depreciation recorded on factory equipment, $105,000. e. Other manufacturing overhead costs accrued during October, $131,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $6 per machine-hour. A total of 76,300 machine-hours were used in October. g. Jobs costing $512,000 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 30% 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 $35,000.

Answer 1

Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a	Raw material inventory Dr.				209000
	Accounts payable					209000
b.	Work in process inventory Ddr.				151200
	Manufacturing Overheads Dr.				37800
	Raw material inventory					189000
c.	Work in process inventory Ddr.				49000
	Manufacturing Overheads Dr.				21000
	Wages payable					70000
d.	Manufacaturing Overheads Dr.				105000
	Accumulated depreciation					105000
e.	Manufacaturing Overheads Dr.				131000
	Accounts payable					131000
f.	Work in process inventory Dr.				457800
	Manufacturing Overheads					457800
	(76300 MH @ 6)
g.	Finished goods inventory Dr.				512000
	Work in process inventory					512000
h.	Cost of goods sold Dr.				448000
	Finished Goods ivnentory					448000
	Accounts receivable Dr. (448000+30%)				582400
	Sales revenue					582400
Work In Process Inventory Account
Balance		35,000	Finished Goods inv.		512,000
Raw material Inv.		151,200
Wages Payable		49,000
Manufacturing Overheads		457,800
Balance		181,000
Manufacturing Overheads
Balance		0	Work in process inv.		457,800
Raw material Inv.		37,800
Wages Payable		21,000
Acc. Dep		105,000
Accounts payable		131,000
			Balance		163,000