Question

nan Inc. uses a job-order costing system. During the month of May, the following transactions occurred: May 1 Purchased materials on account for $29,670. 3 Requisitioned materials totaling $24,500 for use in production. Of the total, $9,200 was for Job 58, $8,900 for Job 59, and the remainder for Job 60. 31 Incurred direct labor for the month of $32,400, with an average wage of $18 per hour. Job 58 used 800 hours; Job 59, 600 hours; and Job 60, 400 hours. 31 Incurred and paid actual overhead of $17,880 (credit Various Payables). Charged overhead to production at the rate of $4.80 per direct labor hour. 31 31 Completed and transferred Jobs 58 and 59 to Finished Goods. 31 Sold Job 57 (see beginning balance of Finished Goods) and Job 58 to their respective clients on account for a price of cost plus 40%. inning balances as of May 1 were: Materials $2,300 Work in Process 0 Finished Goods (Job 57) 25,600 Required: 1. Prepare journal entries for transactions from May 1 through 31. 2. Prepare brief job-order cost sheets for Jobs 58, 59, and 60. 3. Calculate the ending balance of Raw Materials. 4. Calculate the ending balance of Work in Process. 5. Calculate the ending balance of Finished Goods.

Answer 1

1)

Date	Account title	Debit	credit
May 31	Finished goods inventory	50020
	work in process inventory (27440 Job 58 +22580 Job 59)		50020
May 31	cost of goods sold	53040
	Finished goods inventory (25600 Job 57+27440 Job 58)		53040
May 31	Accounts receivable [53040 (1+.40)]	74256
	sales revenue		74256

2)

	Job 58	Job 59	Job 60
Direct material	9200	8900	6400
Direct labor	800*18=14400	600*18=10800	400*18= 7200
overhead applied	800*4.8=3840	600*4.8= 2880	400*4.8= 1920
Total cost	27440	22580	15520
Status	Finished	Finished	WIP

3)Raw material ending balance =Beginning +purchase -issued

        = 2300+29670-24500

         = 7470

4)work in process inventory = cost of Job 60 = 15520

5)Finished goods inventory = cost of job 59 = 22580