Question:
Selected account balances as of January 1 for Remmers Company are: Raw Materials Inventory $220,000, Work in Process Inventory $160,000, and Finished Goods Inventory $350,000.
During 2014, the following transactions took place:
1. Purchased $820,000 of raw materials.
2. Incurred $680,000 of factory labor costs of which $630,000 relate to wages payable and $50,000 to employer payroll taxes payable.
3. Incurred overhead costs of $174,000 (Credit Accounts Payable $124,000 and Cash $50,000).
4. Used direct materials of $600,000 and indirect materials of $200,000.
5. Used direct labor of $650,000 and indirect labor of $30,000.
6. Applied overhead at 30% of direct labor cost.
7. Completed jobs totaling $1,100,000.
8. Sold jobs costing $1,000,000 for $1,400,000, on account.
Instructions
(a) Prepare the entries for Remmers Company for the above transactions assuming a job order cost accounting system is used. (Omit explanations.)
(b) At December 31, the ledger of Remmers Company shows underapplied manufacturing overhead of $5,000. Prepare the entry to transfer this balance to Cost of Goods Sold.