Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $211,000. b. Raw materials used in production, $192,000 ($153,600 direct materials and $38,400 indirect materials). C. Accrued direct labor cost of $49,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $106,000. e. Other manufacturing overhead costs accrued during October, $130,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,400 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 36% 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 $35,000. Complete this question by entering your answers in the tabs below. Required 1 Required 2

Answer 1

1)

Transaction	General Journal	Debit	Credit
a.	Raw materials	$211000
	Accounts payable		$211000
	(To record raw materials purchased on account)
b.	Work in process	$153600
	Manufacturing overhead	$38400
	Raw materials		$192000
	(To record raw materials used in production)
c.	Work in process	$49000
	Manufacturing overhead	$21000
	Salaries and wages payable		$70000
	(To record labor cost accrued)
d.	Manufacturing overhead	$106000
	Accumulated depreciation- Factory equipment		$106000
	(To record depreciation on factory equipment)
e.	Manufacturing overhead	$130000
	Accounts payable		$130000
	(To record other manufacturing overhead costs accrued)
f.	Work in process (7*$76400)	$534800
	Manufacturing overhead		$534800
	(To record manufacturing overhead applied)
g.	Finished goods	$511000
	Work in process		$511000
	(To record work in process transferred to finished goods)
h (1)	Accounts receivable ($450000*136%)	$612000
	Sales revenue		$612000
	(To record sales on account)
h (2)	Cost of goods sold	$450000
	Finished goods		$450000
	(To record cost of goods sold)

2)

Manufacturing Overhead					Work in Process
b.	$38400	534800	f.		Beg. Bal.	$35000
c.	21000				b.	153600	511000	g.
d.	106000				c.	49000
e.	130000				f.	534800
End. Bal.		239400
					End. Bal.	$261400