Question

Journal Entries, T-Accounts Ehrling Brothers Company makes jobs to customer order. During the month of July, the following occurred: a. Materials were purchased on account for $45,760. b. Materials totaling $40,980 were requisitioned for use in producing various jobs. c. Direct labor payroll for the month was $19,200 with an average wage of $12 per hour. d. Actual overhead of $8,850 was incurred and paid in cash. e. Manufacturing overhead is charged to production at the rate of $5.40 per direct labor hour. f. Completed jobs costing $58,000 were transferred to Finished Goods. g. Jobs costing $59,000 were sold on account for $ 73,750. Make the entry to record the revenue from the sale first, followed by the entry to record the cost of the jobs. Beginning balances as of July 1 were: Materials Inventory $1,300 3,400 Work-in-Process Inventory Finished Goods Inventory 2,640 Required: 1. Prepare the journal entries for the preceding events.

Answer 1

Requirement 1
	Direct Labour Payroll	$19,200
	Wages	$12 per hour
	Total Direct Labour Hours (Direct Labour Payroll/Wages)	1600
	Manufacturing Overhead	8640
	Journal	(in $)	(in $)
Date	Particulars	Debit	Credit
a	Raw Materials Inventory	45,760
	Accounts Payable		45,760
	(Raw material purchased)
b	Work-in-progress Inventory	40,980
	Raw Materials Inventory		40,980
	(Direct material requisition for production)
c	Work-in-progress Inventory	19,200
	Wages and Salaries payable		19,200
	(Salaries and wages accrued)
d	Overhead Control	8,850
	Cash		8,850
	(Overhead Charges incurred in Cash)
e	Work-in-progress Inventory	8,640
	Overhead Control		8,640
	(Other mfg OH incurred on account)
f	Finished Goods Inventory	58,000
	Work-in-progress Inventory		58,000
	(Jobs costing transferred to Finished Goods)
g(1)	Accounts Receivable	73,750
	Sales Revenue		73,750
	(Sales Recorded)
g(2)	Cost of Goods Sold	59,000
	Finished Goods Inventory		59,000
	(Cost of Job Recorded)
Requirement 2
Dr	Materials Inventory		Cr
Particulars	in $	Particulars	in $
Balance b/d	1,300	Work-in-progress Inventory	40,980
Accounts Payable	45,760
		Balance c/d	6,080
Total	47,060	Total	47,060
Dr	Work-in-Progress Inventory		Cr
Particulars	in $	Particulars	in $
Balance b/d	3,400	Finished Goods Inventory	58,000
Raw Materials Inventory	40,980
Wages and Salaries Payable	19,200
Overhead Control	8,640	Balance c/d	14,220
Total	72,220	Total	72,220
Dr	Overhead Control		Cr
Particulars	in $	Particulars	in $
Cash	8,850	Work-in-progress inventory	8,640
		Balance c/d	210
Total	8,850	Total	8,850
Dr	Finished Goods Inventory		Cr
Particulars	in $	Particulars	in $
Balance b/d	2,640	Cost of Goods sold	59000
Work-in-progress inventory	58,000
		Balance c/d	1,640
Total	60,640	Total	60,640