Question

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $7,600, direct labor of $3,000, and applied overhead of $2,700. Custom Cabinetry applies overhead at the rate of 90% of direct labor cost. During July, Job 120 is sold (on account) for $27,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July. July Product Costs Direct materials Direct labor Overhead applied Job 120 Job 121 Job 122 $1,600 $8,900 $4,000 2,500 4,300 2,100 ? ? ? Total $14,500 8,900 ? 1. Prepare journal entries for the following in July. a. Direct materials used in production. b. Direct labor used in production. C. Overhead applied. d. The sale of Job 120. e. Cost of goods sold for Job 120. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Answer 1

Particular	job 120	job 121	job 122	total
Beginning ($7600+$3000+$2700)	$13300
Current cost
Material	$1600	$8900	$4000	$14500
Labour	$2500	$4300	$2100	$8900
Overheads @90% on direct labour cost	($2500×90%) $2250	($4300×90%) $3870	($2100×90%) $1890	$8010
	Sold	finished goods	work in process

journal entries

S.no	particular	Debit ($)	Credit ($)
1	work in process	14500
	Raw material inventory		14500
2	work in process	8900
	Wages payable		8900
3	work in process	,8010
	Manufacturing OVERHEAD		8010
4	accounts receivable	27000
	Sales		27000
5	cost of goods sold($13300+$1600+$2500+$2250)	19650
	Finished goods		19650

2)

	Work in process	finished goods
Job	122	121
Material	$4000	$8900
Labour	$2100	$4300
Overheads	$1890	$3870
Total	$7990	$17070

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