Question

E16-2 Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following. Job Number 429 430 431 General use Materials Requisition Slips $2,500 3,500 4,400 $10,400 800 $11,200 Labor Time Tickets $1,900 3,000 7,600 $12,500 1,200 $13,700 Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month. Instructions (a) Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429.

Answer 1

Solution:

Journal Entry
S.no.	Particulars	Debit	Credit
1	Work in process Inventory Dr	$10,400
	Manufacturing Overhead Dr	$800
	To Raw Material Inventory		$11,200
2	Work in process Inventory Dr	$12,500
	Manufacturing Overhead Dr	$1,200
	To Factory labor		$13,700
3	Work in process Inventory Dr ($12500*60%)	$7,500
	To Manufacturing Overhead		$7,500
4	Finished goods Inventory Dr [Job No. 429 = $2000+$2500+$1900+($1900*60%)	$7,540
	To Work in process inventory		$7,540