Question

Required information

The Foundational 15 [LO3-1, LO3-2, LO3-3, LO3-4]

[The following information applies to the questions displayed below.]

Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company’s inventory balances were as follows:

Raw materials	$	62,500
Work in process	$	23,200
Finished goods	$	36,900

The company applies overhead cost to jobs on the basis of direct labor-hours. For the current year, the company’s predetermined overhead rate of $11.00 per direct labor-hour was based on a cost formula that estimated $440,000 of total manufacturing overhead for an estimated activity level of 40,000 direct labor-hours. The following transactions were recorded for the year:

1. Raw materials were purchased on account, $694,000.
2. Raw materials used in production, $644,800. All of of the raw materials were used as direct materials.
3. The following costs were accrued for employee services: direct labor, $390,000; indirect labor, $150,000; selling and administrative salaries, $246,000.
4. Incurred various selling and administrative expenses (e.g., advertising, sales travel costs, and finished goods warehousing), $430,000.
5. Incurred various manufacturing overhead costs (e.g., depreciation, insurance, and utilities), $290,000.
6. Manufacturing overhead cost was applied to production. The company actually worked 41,000 direct labor-hours on all jobs during the year.
7. Jobs costing $1,403,100 to manufacture according to their job cost sheets were completed during the year.
8. Jobs were sold on account to customers during the year for a total of $2,827,500. The jobs cost $1,413,100 to manufacture according to their job cost sheets.

Foundational 3-11

11. What is the journal entry to record the cost of goods sold referred to in item h above? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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Answer 1

Journal entry
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cost of goods sold			14,13,100
	Finished goods inventory			14,13,100
	(for cost of goods sold recorded)