Question

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.

1. Purchased $18,500 of materials on account.

2. Issued $1,050 of supplies from the materials inventory.

3. Purchased $11,700 of materials on account

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $14,100 in direct materials to the production department.

6. Incurred direct labor costs of $22,500, which were credited to Wages Payable.

7. Paid $21,700 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

8. Applied overhead on the basis of 120 percent of $22,500 direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $10,500

The following balances appeared in tge accounts of Steve’s Cabinets for April.

Beginning Ending

Materials Inventory $30,300 ?

Work-in-process Inventory $7,100 ?

Finished Goods Inventory $33,700 $28,890

Cost of Goods Sold $53,430

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Answer 1

a.

Prepare the journal entries as follows:

No	Accounts name and explanation	Debit	Credit
1	Materials inventory	18500
	Accounts payable		18500
2	Manufacturing overhead control	1050
	Materials inventory		1050
3	Material inventory	11700
	Accounts payable		11700
4	Accounts payable	18500
	Cash		18500
5	WIP - direct materials	14100
	Material inventory		14100
6	WIP - direct labor	22500
	Wages payable		22500
7	Manufacturing overhead control	21700
	Cash		21700
8	WIP - overhead	22500
	Applied manufacturing overhead		22500
9	Manufacturing overhead control	10500
	Accumulated depreciation		10500

b.

Prepare t - accounts as follows:

Material inventory
No	Dr	No	Cr
1	18500	2	1050
3	11700	5	14100
		BF	15050
	30200		30200
Accounts payable
No	Dr	No	Cr
4	18500	1	18500
BF	11700	3	11700
	30200		30200
Manufacturing overhead control
No	Dr	No	Cr
2	1050	BF	33250
7	21700
9	10500
	33250		33250
Cash
No	Dr	No	Cr
BF	40200	4	18500
		7	21700
	40200		40200
WIP - direct materials
No	Dr	No	Cr
5	14100	BF	14100
WIP - direct labor
No	Dr	No	Cr
6	22500	BF	22500
WIP - overhead
No	Dr	No	Cr
8	22500
Applied manufacturing overhead
No	Dr	No	Cr
BF	22500	8	22500
Accumulated depreciation
No	Dr	No	Cr
BF	10500	9	10500