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Widmer Watercraft’s predetermined overhead rate is 200% of direct labor. Information on the company’s production activities during May follows.

1. Purchased raw materials on credit, $220,000.
2. Materials requisitions record use of the following materials for the month.

Job 136	$	50,000
Job 137		33,500
Job 138		19,600
Job 139		22,600
Job 140		6,600
Total direct materials		132,300
Indirect materials		21,000
Total materials used	$	153,300

3. Paid $16,000 cash to a computer consultant to reprogram factory equipment.
4. Time tickets record use of the following labor for the month. These wages were paid in cash.

Job 136	$	12,200
Job 137		10,800
Job 138		37,700
Job 139		39,400
Job 140		3,000
Total direct labor		103,100
Indirect labor		25,000
Total	$	128,100

5. Applied overhead to Jobs 136, 138, and 139.
6. Transferred Jobs 136, 138, and 139 to Finished Goods.
7. Sold Jobs 136 and 138 on credit at a total price of $535,000.
8. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building	$	69,000
Depreciation of factory equipment		37,000
Expired factory insurance		10,000
Accrued property taxes payable		37,000

9. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

2. Prepare journal entries to record the events and transactions a through i.

Answer 1

Transaction	General Journal	Debit	Credit
a.	Raw materials inventory	220,000
	Accounts payable		220,000
b	Goods in process inventory	132,300
	Factory overhead	21,000
	Raw materials inventory		153,300
c	Factory overhead	15,750
	Cash		15,750
d	Goods in process inventory	103,100
	Factory overhead	25,000
	Factory payroll		128,100
e.	Goods in process inventory	178,600
	Factory overhead		178,600
f.	Finished goods inventory	360,100
	Goods in process inventory		360,100
g1.	Accounts receivable	535,000
	Sales		535,000
g2	Cost of goods sold	219,300
	Finished goods inventory		219,300
h	Factory overhead	153,000
	Accum. depreciation—Factory building		69,000
	Accum. depreciation—Factory equipment		37,000
	Prepaid insurance		10,000
	Property taxes payable		37,000
i.	Goods in process inventory	27,600
	Factory overhead		27,600