Question

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Widmer Watercraft’s predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the company’s production activities during May 2017 follows.

1. Purchased raw materials on credit, $240,000.
2. Materials requisitions record use of the following materials for the month.

Job 136	$	48,500
Job 137		33,000
Job 138		20,000
Job 139		23,000
Job 140		7,200
Total direct materials		131,700
Indirect materials		21,500
Total materials used	$	153,200

3. Paid $15,500 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	$	12,100
Job 137		10,700
Job 138		38,100
Job 139		39,400
Job 140		3,800
Total direct labor		104,100
Indirect labor		26,000
Total	$	130,100

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 $530,000.
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		38,000
Expired factory insurance		10,000
Accrued property taxes payable		35,000

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.

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

Answer 1

		job 136	job 137	job138	job139	job140	total
Materials		48,500	33,000	20,000	23,000	7,200	131,700
labor		12,100	10,700	38,100	39,400	3,800	104,100
overhead		24,200	21400	76200	78800	7600	208,200
total		84,800	65,100	134,300	141,200	18,600	444,000
2)	TR	General Journal				Debit	Credit
	a)	Raw materials inventory				240,000
		Accounts payable					240,000
	b)	Work in process inventory				131,700
		Factory overhead				21,500
		Raw materials inventoy					153,200
	c)	Factory overhead				15,500
		cash					15,500
	d)	Work in process inventory				104,100
		Factory overhead				26,000
		Cash					130,100
	e)	Work in process overhead				179,200
		Factory overhead					179,200
	f)	finished goods inventory				360,300
		Work in process inventory					360,300
	g)	Accounts receivable				530,000
		Sales					530,000
		cost of goods sold				219,100
		finished goods inventory					219,100
	h)	Factory overhead				152,000
		Accumulated depreciation-factory building					69,000
		Accumulated depreciation-factory equipment					38,000
		prepaid insurance					10,000
		property taxes payable					35,000
	i)	work in process inventory				29,000
		Factory overhead					29,000
	T- Accounts
Raw materials inventory					Work in process inventory
a.	240,000				b.	131,700
		153,200	b.		d.	104,100
					e.	179,200
end bal	86,800						360,300	f.
					i.	29000
					bal	83,700
Factory overhead					finished goods inventory
b.	21,500				f.	360,300
c.	15,500						219,100	g.
d.	26,000				bal	141,200
		179,200	e.
h.	152,000
		29,000	i
bal	6,800
cost of goods sold
g.	219,100
end bal	219,100
Report of Job costs
Work in process inventory
job 137			65,100
job 140			18,600
Balance			83,700
finished goods inventory
job 139			141,200
Balance			141,200
cost of goods sold
job 136			84,800
job 138			134,300
balance			219,100