Question

The Polaris Company uses a job-order costing system. The following transactions occurred in October: ES a. Raw materials purchased on account, $210,000. b. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials). c. Accrued direct labor cost of $50,000 and indirect labor cost of $21,000. d. Depreciation recorded on factory equipment, $105,000. e. Other manufacturing overhead costs accrued during October, $129,000. f. The company applies manufacturing overhead cost to production using a predetermined rate of $6 per machine- hour. A total of 76,100 machine-hours were used in October. g. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods h. Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 30% above cost. es 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 $36,000 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries to record the transactions given above. (If no entry is required for a transaction/event, select "No required in the first account field.)

Answer 1

Solution 1:
Journal Enteries - Polaris Company
S. No	General Journal	Debit	Credit
a	Raw Material Inventory Dr	$210,000.00
	To Accounts Payable		$210,000.00
	(Raw material purchased on account)
b	Work In Process Dr	$152,000.00
	Manufacturing Overhead Dr	$38,000.00
	To Raw Material Inventory		$190,000.00
	(Being Raw material used in production)
c	Work In Process Dr	$50,000.00
	Manufacturing Overhead Dr	$21,000.00
	To Wages Payable		$71,000.00
	(Being labor cost accrued)
d	Manufacturing overhead Dr	$105,000.00
	To Accumulated depreciation - Factory Equipment		$105,000.00
	(Being depreciation charged on factory equipment)
e	Manufacturing overhead Dr	$129,000.00
	To Accounts Payable		$129,000.00
	(Being other manufacturing overhead cost incurred)
f	Work In Process Dr (76100 * $6)	$456,600.00
	To Manufacturing overhead		$456,600.00
	(Being manufacturing overhead applied to prodcution)
g	Finished Goods Inventory Dr	$512,000.00
	To Work In Process		$512,000.00
	(Being cost of completed goods transferred to finished goods)
h-1	Cost of goods sold Dr	$452,000.00
	To Finished Goods Inventory		$452,000.00
	(Being cost of unit sold transferred to COGS)
h-2	Accounts Receivables Dr ($452,000*130%)	$587,600.00
	To Sales Revenue		$587,600.00
	(To record sales on account)

Solution 2:
Manufacturing Overhead Account
Particulars	Debit	Particulars	Credit
To Raw material inventory	$38,000.00	By Work In Process	$456,600.00
To Wages Payable	$21,000.00
To Accumulated depreciation - Factory Equipment	$105,000.00
To Accounts Payable	$129,000.00
To Ending balance	$163,600.00
Total	$456,600.00	Total	$456,600.00
Work in Process Account
Particulars	Debit	Particulars	Credit
To Beginning Balance	$36,000.00	By Finished goods inventory	$512,000.00
To Raw Material Inventory	$152,000.00	By Ending balance	$182,600.00
To Wages Payable	$50,000.00
To Manufacturing overhead applied	$456,600.00
Total	$694,600.00	Total	$694,600.00