EXERCISE 3–5 Journal Entries and T-accounts LO3–

1, LO3–2 The Polaris Company uses a job-order costing system. The following transactions occurred in October:

a. Raw materials purchased on account, $210,000.

b. Raw materials used in production, $190,000 ($178,000 direct materials and $12,000 indirect materials).

c. Accrued direct labor cost of $90,000 and indirect labor cost of $110,000.

d. Depreciation recorded on factory equipment, $40,000.

e. Other manufacturing overhead costs accrued during October, $70,000.

f. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machinehour.

A total of 30,000 machine-hours were used in October.

g. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

h. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost.
Required:
1. Prepare journal entries to record the transactions given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.