1. 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 $8permachine-hour. 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.

2.

EXERCISE 3 Schedules of Cost of Goods Manufactured and Cost of Goods Sold; Income Statement LO3-3 The following data from the just completed year are taken from the accounting records of Mason Company: Sales . .. $524,000 Direct labor cost $70,000 Raw material purchases $1 18,000 Selling expenses $140,000 Administrative expenses . .. $63,000 Manufacturing overhead applied to work in process . ... ... $90,000 Actual manufacturing overhead costs ........ $80,000 Chapter 3 Inventories Beginning Ending Raw materials . . . $7,000 $15,000 Work in process . . . . . $10,000 $5,000 Finished goods $20,000 $35,000 Required: 1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials. 2. Prepare a schedule of cost of goods sold. Assume that the company's underapplied or overapplied overhead is closed to Cost of Goods Sold. 3. Prepare an income statement