Exercise - Journal Entries and T-accounts
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, $21,000.
d. Depreciation recorded on factory equipment, $105,000.
e. Other manufacturing overhead costs incurred during October, $129,000 (credit Accounts Payable).
f. The company applies manufacturing overhead cost to production on the basis of $6 per machine-hour. A total of 76,400 machine-hours were recorded for October.
g. Production orders costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Production orders that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 38% above cost.
Required -
1. Prepare journal entries to record the information given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balances in each account, assuming that Work in Process has a beginning balance of $36,000.