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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, $200,000.
2. Materials requisitions record use of the following materials for the month.

Job 136	$	48,500
Job 137		33,500
Job 138		19,200
Job 139		22,800
Job 140		7,200
Total direct materials		131,200
Indirect materials		20,500
Total materials used	$	151,700

3. Paid $15,000 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	$	12,000
Job 137		10,600
Job 138		37,700
Job 139		39,400
Job 140		3,600
Total direct labor		103,300
Indirect labor		24,000
Total	$	127,300

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 $540,000.
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		36,500
Expired factory insurance		11,000
Accrued property taxes payable		36,500

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.

3. Post the journal entries for the transactions to the following T-accounts, each of which started the month with a zero balance.
Raw Material Inventory

Factory Overhead

Cost of Goods Sold

Work in Process Inventory

Finished Goods Inventory

Answer 1

Open ledger accounts of the following:

Raw material inventory

Work in process inventory

Finished goods inventory

Factory overhead

Cost of goods sold

Enter balances as 0

Enter the transactions in the ledger accounts.

Preparation of T accounts Work in Process Inventory Amount Credit Finished Goods Inventory Amount Credit Amount Amount Debit Balance Accounts Payable Raw Material Inventory Amount Credit Work in Process Inventory 200,000 Factory Overhead Amount 131,200 20,500 Debit Balance 357,800 Work in Process Inventory 84,500+132,300+141,000 Cost of Goods Sold Job 136 Job 138 84,500 132,300 141,000 84,500 132,300 48,300 Balance (Balancing amount) Debit Balance Raw Material Inventory Cash Factory Overhead Job 136=12,000*200% Job 138=37,700*200% Job 139=39,400* 200% Job 137=10,600* 200% Job 140=3,600*200% 141,000 131,200 Finished Goods Inventory 103,300 Job 136=48,500+12,000+24,000 Job 138=19,200+37,700+75,400 24,000 Job 139=22,800+39,400+78,800 75,400 78,800 Balance 21,200 7,200 (Balancing amount) 441,100 Total Balance (Balancing amount) 83,300 Total 200,000 Total 200,000 Total 441,100 Total 357,800 Total 357,800 Factory Overhead Amount Credit Cost of Goods Sold Amount Credit Debit Amount Debit Amount Finished Goods Inventory 216,800 Income Summary 216,800 20,500 Work in Process Inventory 15,000 Job 136=12,000* 200% 24,000 Job 138=37,700*200% 24,000 75,400 Total 216,800 Total 216,800 Raw Material Inventory Cash Cash Accumulated Depreciation-Factory building Accumulated Depreciation-Factory equipment Prepaid Insurance Property taxes payable 69,000 Job 139=39,400*200% 78,800 36,500 Job 137=10,600* 200% 11,000 Job 140=3,600* 200% 36,500 Balance (Balancing amount) 212,500 Total 21,200 7,200 5,900 Total 212,500