Answer to Question #317805 in Accounting for Lydia

Question

ABC uses job-order costing. It applies overhead cost to jobs on the basis of direct

labor-hours. The following transactions took place during the year:

A.   $300,000 of raw materials were purchased on account

B.   Raw materials were issued into production: $90,000 direct materials and

$40,000 indirect materials

C.   Labor costs incurred: $40,000 direct, $130,000 indirect, sales commissions

$50,000, administrative salaries $100,000

D.   Utility costs for the factory were $60,000

E.    Depreciation recorded was $300,000 (70% related to factory; 30% related

to administrative offices)

F.    Manufacturing overhead of $715,000 was applied to production. Actual

direct labor-hours incurred were 22,000.

G.   Units costing $300,000 were completed and transferred into the finished

goods inventory.

H.   Goods with a cost of $150,000 were sold on account for $200,000.

I.      Closed the under/overapplied overhead for the year

Answer 1

  General Journal  Debit    Credit 

a Raw Materials  $   90,000.00    

Accounts Payable    $   90,000.00        

b Work in Progress  $   90,000.00    

Manufacturing overheads  $   40,000.00    

Raw Materials    $ 130,000.00        

c Work in Progress  $   40,000.00    

Manufacturing overheads  $ 130,000.00    

Sales Commission Expense  $   50,000.00    

Administrative Salaries Expense  $ 100,000.00    

Salaries and Wages Payable    $ 320,000.00        

d Manufacturing overheads   $   60,000.00    

Accounts Payable    $   60,000.00        

e Manufacturing overheads  $ 210,000.00    

Depreciation expense  $   90,000.00    

Accumulated depreciation    $ 300,000.00        

f Work in progress  $ 715,000.00    

Manufacturing overheads    $ 715,000.00        

g Finished goods  $ 300,000.00    

Work in progress    $ 300,000.00        

h Accounts receivable  $ 200,000.00    

Sales    $ 200,000.00          

Cost of goods sold  $ 150,000.00    

Finished goods    $ 150,000.00        

i Manufacturing overheads  $ 275,000.00    

Cost of goods sold    $ 275,000.00

Manufacturing overheads

$          40,000.00  $          715,000.00  

$        130,000.00    

$          60,000.00    

$        210,000.00      

$        440,000.00  $          715,000.00

$ 275,000 over applied