Question

Ravsten Company uses a job-order costing system on January 1, the beginning of the current year, the company's inventory balances were as follows: .. Raw Materials ................... Work in Process.. Finished Goods .. $16,000 $10,000 $30,000 The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,000 machine-hours and incur $153,000 in manufacturing overhead cost. The following transactions were recorded for the year: a. b. Raw materials were purchased on account: $200,000. Raw materials were requisitioned for use in production: $190,000 (80% direct and 20% indirect), The following costs were incurred for employee services: Direct labour .......... ............ Indirect labour ............ ........... Sales commissions.... ....... Administrative salaries.. ........... $160,000 $ 27,000 $ 36,000 $ 80,000 d. Heat, power, and water costs were incurred in the factory: $42,000. Prepaid insurance expired during the year: $10,000 (90% relates to factory operations, and 10% relates to selling and administrative activities) Advertising costs were incurred, $50,000. & Depreciation was recorded for the year: $60,000 (85% relates to factory operations, and 15% relates to selling and administrative activities) Manufacturing overhead cost was applied to production. The company recorded 40,000 machine- hours for the year. i Goods that cost $480,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. į Sales for the year totalled $700,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $475,000. Required: 1 Prepare journal entries to record the transactions given above. 2 Prenare T ute fout

1. Prepare Journal entries to record the transaction given above

Answer 1

In the books of Ravsten Company:

Event	Account Titles	Debit	Credit
		$	$
a.	Raw Materials	200,000
	Accounts Payable		200,000
b.	Work in Process	152,000
	Manufacturing Overhead	38,000
	Raw Materials		190,000
c..	Work in Process	160,000
	Manufacturing Overhead	27,000
	Sales Commissions Expense	36,000
	Administrative Salaries Expense	80,000
	Salaries and Wages Payable		303,000
d.	Manufacturing Overhead	42,000
	Accounts Payable		42,000
e.	Manufacturing Overhead	9,000
	Insurance Expense	1,000
	Prepaid Insurance		10,000
f.	Advertising Expense	50,000
	Accounts Payable		50,000
g.	Manufacturing Overhead	51,000
	Depreciation Expense	9,000
	Accumulated Depreciation		60,000
h.	Work in Process	170,000
	Manufacturing Overhead		170,000
i.	Finished Goods	480,000
	Work in Process		480,000
j.	Accounts Receivable	700,000
	Sales Revenue		700,000
j.	Cost of Goods Sold	475,000
	Finished Goods		475,000