Question

Heurion Company is a job-order costing firm that uses a plantwide overhead rate based on direct labor dollars. Estimated information for the year is as follows:

Overhead - $789,000

Direct Labor Dollars - $1,642,000

By July 31, Jobs 741 and 743 were completed and sold. The remaining jobs were in process

Selling price = cost + 25% markup

Heurion worked on 5 jobs in July. Data are as follows:

	Job 741	Job 742	Job 743	Job 744	Job 745
Balance, July 1	29,870	55,215	27,880	0	0
Direct materials	25,500	39,800	14,450	13,600	8,420
Direct labor cost	61,300	48,500	28,700	24,500	21,300
Direct labor hours	4,000	3,400	1,980	1,600	1,400

Prepare journal entries for the month of July.

Answer 1

Journal entry

No	General Journal	Debit	Credit
1	Work in process	101770
	Direct material		101770
	(To record material used)
2	Work in process	184300
	Direct labor		184300
	(To record labor )
3	Work in process	88558
	Manufacturing overhead		88558
	(To record applied overhead)
4	Finished goods	230946
	Work in process		230946
	(To record job completed)
5	Cost of goods sold	230946
	Finished goods		230946
	(To record cost of goods sold)
	Account receivable (230946*1.25)	288683
	Sales revenue		288683
	(To record sales)