The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company's fiscal year.

Exercise 2-14 Journal Entries and T-accounts [LO4, LO5, LO7]

The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company's fiscal year.

a.	Raw materials purchased on account, $210,000.
b.	Raw materials issued to production, $192,000 ($153,600 direct materials and $38,400 indirect materials).
c.	Direct labor cost incurred, $48,000; indirect labor cost incurred, $20,000.
d.	Depreciation recorded on factory equipment, $104,000.
e.	Other manufacturing overhead costs incurred during October, $131,000 (credit Accounts Payable).
f.	The company applies manufacturing overhead cost to production on the basis of $4 per machine- hour. A total of 76,000 machine-hours were recorded for October.
g.	Production orders costing $513,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h.	Production orders that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 50% above cost.

 

Requirement 1:

Prepare journal entries to record the information given above. (Omit the "$" sign in your response.)

	General Journal	Debit	Credit
a.	Raw materials inventory
	Accounts payable
b.	Work in process
	Manufacturing overhead
	Raw materials inventory
c.	Work in process
	Manufacturing overhead
	Salaries and wages payable
d.	Manufacturing overhead
	Accumulated depreciation
e.	Manufacturing overhead
	Accounts payable
f.	Work in process
	Manufacturing overhead
g.	Finished goods
	Work in process
h.	Cost of goods sold
	Finished goods
	Accounts receivable
	Sales

 

Requirement 2:

Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.(Record the transactions in the given order. Omit the "$" sign in your response.)

Manufacturing Overhead

(b)			(f)
(c)
(d)
(e)
			End. Bal

Work in Process

Beg. Bal			(g)
(b)
(c)
(f)
End. Bal

Explanation:

1:

Work in Process:

76,000 MH × $4 per MH = $304,000.

Accounts Receivable:

$449,000 × 1.5 = $673,500

Manufacturing Overhead

(b)			(f)
(c)
(d)
(e)
			End. Bal

Work in Process

Beg. Bal			(g)
(b)
(c)
(f)
End. Bal

Explanation:

1:

Work in Process:

76,000 MH × $4 per MH = $304,000.

Accounts Receivable:

$449,000 × 1.5 = $673,500

4:

The unit product cost on the job cost sheet would be:

$562,282 ÷ 8,000 units = $70.29 per unit.