Question

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, $190,000 ($152,000 direct materials and $38,000 indirect materials). c. Accrued direct labor cost of $49,000 and indirect labor cost of $22,000. d. Depreciation recorded on factory equipment, $105,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,200 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 $450,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 34% 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 $37,000. 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 required" in the first account field.)

Answer 1

1) Journal entry

No	General Journal	Debit	Credit
a	Raw material	210000
	Account payable		210000
b	Work in process	152000
	Manufacturing overhead	38000
	Raw material		190000
c	Work in process	49000
	Manufacturing overhead	22000
	wages payable		71000
d	Manufacturing overhead	105000
	Accumulated depreciation-equipment		105000
e	Manufacturing overhead	130000
	Account payable		130000
e	Work in process (76200*5)	381000
	Manufacturing overhead		381000
f	Finished goods	511000
	work in process		511000
g	Account receivable (450000*1.34)	603000
	Sales revenue		603000
	(To record sales)
	Cost of goods sold	450000
	Finished goods		450000
	(To record cost of goods sold)

b) T account

Manufacturing overhead					Work in process
Raw material	38000	Work in process	381000		Beg Bal	37000	Finished goods	511000
wages payable	22000				Raw material	152000
Accumulated depreciation	105000				wages payable	49000
Account payable	130000				Manufacturing overhead	381000
		Balance	86000		Balance	108000