Question

Required information [The following information applies to the questions displayed below.] Marcelino Co.s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 Balances on March 31 $ 35,000 $ 29,000 Direct materials Direct labor 18,000 9,000 20,000 Applied overhead Costs during April Direct materials 10,000 $100,000 105,000 135,000 220,000 150,000 Direct labor 85,000 Applied overhead Finished Finished In process Status on April 30 (sold) (unsold) a. Materials purchases (on credit). b. Direct materials used in production. c. Direct labor paid and assigned to Work in Process Inventory. d. Indirect labor paid and assigned to Factory Overhead. e. Overhead costs applied to Work in Process Inventory. f. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) g. Transfer of Jobs 306 and 307 to Finished Goods Inventory. h. Cost of goods sold for Job 306. i. Revenue from the sale of Job 306. j. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.) 2. Prepare journal entries for the month of April to record the above transactions.

Answer 1

2.

Transaction	Account Titles	Debit	Credit
		$	$
a.	Raw Materials Inventory	500,000
	Accounts Payable		500,000
b.	Work in Process Inventory	455,000
	Raw Materials Inventory		455,000
c.	Work in Process Inventory	340,000
	Cash		340,000
d.	Factory Overhead	23,000
	Cash		23,000
e.	Work in Process Inventory	170,000
	Factory Overhead		170,000
f.i.	Factory Overhead	50,000
	Raw Materials Inventory		50,000
f. ii.	Factory Overhead	19,000
	Cash		19,000
f. iii.	Factory Overhead	51,000
	Accumulated Depreciation: Factory Equipment		51,000
f. iv.	Factory Overhead	32,000
	Cash		32,000
g.	Finished Goods Inventory	828,500
	Work in Process Inventory		828,500
h.	Cost of Goods Sold	321,500
	Finished Goods Inventory		321,500
i.	Cash	635,000
	Sales		635,000
j.	Cost of Goods Sold	5,000
	Factory Overhead		5,000

Workings:

Overhead applied		$ 170,000
Overhead incurred
Indirect materials	$ 50,000
Indirect labor	23,000
Factory rent	32,000
Factory utilities	19,000
Depreciation: Factory Equipment	51,000	175,000
Underapplied overhead		$ 5,000