Question

Exercise 7-24 (Algo) Assigning Costs to Jobs (LO 7-1, 2) Forest Components makes aircraft parts. The following transactions occurred in July. 1. Purchased $16,820 of materials on account. 2. Issued $16,890 in direct materials to the production department. 3. Issued $1,390 of supplies from the materials inventory. 4. Paid for the materials purchased in transaction (1) using cash. 5. Returned $2,060 of the materials issued to production in (2) to the materials inventory. 6. Direct labor employees earned $32,800, which was paid in cash. 7. Purchased miscellaneous items for the manufacturing plant for $17,370 on account. 8. Recognized depreciation on manufacturing plant of $35,900. 9. Applied manufacturing overhead for the month. Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $435,000. Estimated overhead for the year was $408,900. The following balances appeared in the inventory accounts of Forest Components for July. Materials Inventory Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold Beginning Ending $12,490 ? 10,660 $2,770 7,010 2 75,400 Required: a. Prepare journal entries to record these transactions. b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold. Complete this question by entering your answers in the tabs below.

Answer 1

a.) Journal Entries -

Serial No.	Account Debit	Account Credit	Amount (In $)
	Purchases A/c	Cash A/c	16820
	Production Department A/c	Inventory A/c	16890
	Production Department A/c	Material Inventory A/c	1390
	Inventory A/c	Production Department A/c	2060
	Direct Labour A/c	Cash A/c	32800
	Purchases A/c	Cash A/c	17370
	Depreciation A/c	Plant & Machinery A/c	35900