Question: Relationship of Subsidiary and General Ledgers, Journal Entries The following summarized data are available on three job-cost records of Red Lake Manufacturing Company, a producer of packaging equipment:
The company's fiscal year ends on May 31. Factory overhead is applied as a percentage of directlabor costs. The balances in selected accounts on April 30 were as follows: direct-materials inventory, $19,000; finished-goods inventory, $18,000. Job 412 was completed during May and transferred to
finished goods. Job 413 was still in process at the end of May, as was Job 414, which had started May 24. These were the only jobs worked on during April and May. Job 412 was sold, along with other finished goods, by May 30. The total cost of goods sold during May was $33,000. The balance in Cost of Goods Sold for sales through April 30 was $450,000.
1. Prepare a schedule showing the balance of the WIP Inventory for April 30. This schedule should show the total costs of each job record. Taken together, the job-cost records are the subsidiary ledger supporting the general ledger balance of work in process.
2. What is the overhead application rate?
3. Prepare summary general journal entries for all costs added to WIP during May. Also prepare entries for all costs transferred from WIP to Finished Goods and from Finished Goods to Cost of Goods Sold. Post to the appropriate T-accounts.
4. Prepare a schedule showing the balance of the WIP Inventory, May 31.