a. Purchased materials on account, $460,000. b. Incurred total manufacturing wages of $115,000, which included both direct labor and indirect labor. Used direct labor in manufacturing as follows: Direct Labor Chalet 13.. $ 14,500 Chalet 14. $ 28,500 Chalet 15. $ 19,900 Chalet 16........... $ 21,600 c. Requisitioned direct materials in manufacturing as follows: Direct Materials Chalet 13. $ 41,100 Chalet 14. 56,300 Chalet 15 62,100 Chalet 16 66,900 $ d. Depreciation of manufacturing equipment used on different chalets, $6,200. e. Other overhead costs incurred on Chalets 1316: Equipment rentals paid in cash...... $ 10,200 Prepaid plant insurance expired ..... $ 8,000 f. Allocated overhead to jobs at the predetermined rate of 60% of direct labor cost. g. Chalets completed: 13, 15, and 16. h. Chalets sold on account: 13 for $98,000 and 16 for $147,000. Requirements 1. Record the preceding events in the general journal. 2. Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. 3. Summarize the job costs of the unfinished chalet and show that this equals the ending balance in Work in Process Inventory. 4. Summarize the job cost of the completed chalet that has not yet been sold and show that this equals the ending balance in Finished Goods Inventory. 5. Compute the gross profit on each chalet that was sold. What costs must the gross profit cover for Memory Homes? Memory Homes manufactures prefabricated chalets in Colorado. The company uses a perpetual inventory system and a job cost system in which each chalet is a job. The following events occurred during May: Click the icon to view the events.) Read the requirements Requirement 1. Record the events in the general journal. (Record debits first, then credits. Exclude explanations from any journal entries.) Start with the entry from event (a). Purchased materials on account, $460,000. Journal Entry Date Debit Credit Accounts a. Raw Materials Inventory Accounts Payable (b) Incurred total manufacturing wages of $115,000, which included both direct labor and indirect labor. Date Debit Credit Journal Entry Accounts b. Work in Process Inventory Manufacturing Overhead Wages Payable (c) Requisitioned direct materials in manufacturing. Date Debit Credit Journal Entry Accounts c. || Work in Process Inventory Raw Materials Inventory (d) Depreciation of manufacturing equipment used on different chalets, 56,200. Journal Entry Date Accounts Debit d. | Manufacturing Overhead Accumulated Depreciation-Equipment Credit (e) Other overhead costs incurred on Chalets 1316. Date Debit Credit Journal Entry Accounts e. | Manufacturing Overhead Cash Prepaid Insurance (1) Allocated overhead to jobs at the predetermined rate of 60% of direct labor cost. Date Debit Credit Journal Entry Accounts f. || Work in Process Inventory Manufacturing Overhead (9) Chalets completed: 13, 15, and 16. Date Debit Credit Journal Entry Accounts g. Finished Goods Inventory Work in Process Inventory (h) Chalets sold on account: 13 for $98,000 and 16 for $147,000. First record the sale of the chalets. Journal Entry Date Debit Credit Accounts h. || Accounts Receivable Sales Revenue Next, record the cost of goods sold. Date Debit Credit Journal Entry Accounts h. Cost of Goods Sold Finished Goods Inventory Requirement 2. Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. Identify the ending account balance with the "Bal" reference on the applicable side of the account. Work in Process Inventory Finished Goods Inventory Bal Balv Requirement 3. Summarize the job costs of the unfinished chalet and show that this equals the ending balance in Work in Process Inventory. Add the costs of the unfinished chalet, and show that this total amount equals the ending balance in the Work in Process Inventory account Memory Homes Reconciliation of Work in Process Inventory Subsidiary and Control Accounts Chalet #14 Unfinished chalet: Direct materials Direct labor Manufacturing overhead (60% of labor) Total cost equals Work in Process balance Now compute the gross profit for each chalet sold. Memory Homes Gross Profit on Chalets Sold In May Chalet #13 Chalet #16 Sales revenue Less: Cost of goods sold Gross profit
