Application Project
Situation:
End of the Leash manufactures pet supplies for sale throughout the United States. They produce many different sizes and colors of both leashes and collars, and they use job-order costing in their Collar Division. The company's fiscal year is the calendar year and, as of January 1, the Collar Division of the company had inventory balances as follows:
	Raw materials	$ 45,000
	Work in process	$ 52,000
	Finished goods	$ 65,750
The company applies overhead costs to jobs on the basis of direct labor hours worked. For the current year, the predetermined overhead rate was based on a cost formula that estimated $150,000 of total manufacturing overhead for an estimated activity level of 30,000 direct labor hours. The following transactions were recorded for a select year for this division of the company:
a. Raw materials were purchased on account for $480,000.
b. Advertising costs, on account, for this division were $75,000.
c. Cleaning fees owed to a janitorial company for this division were $10,000. (60% relates to the production facility; 40% relates to selling and administrative activities.)
d. Utility costs in the production facility for this division were $1,200.
e. Depreciation was recorded for the year at $12,000. (65% relates to the production facility; 35% relates to selling and administrative activities.)
f. Raw materials were requisitioned for use in production for $342,000. $267,000 were used for direct materials; $75,000 were used for indirect materials.
g. Costs were accrued for the following employee services: direct labor, $480,000; indirect labor, $74,750; administrative salaries, $158,000; sales commisions, $35,000.
h. Insurance of $3,000 expired during the year. (60% relates to the production facility; 40% relates to selling and administrative activities.)
i. Manufacturing overhead was applied to production. The company worked 32,000 direct labor hours on all jobs during the year.
j. According to their job cost sheets, goods costing $900,000 to manufacture were completed during the year.
k. $873,000 of goods were sold on account to customers during the year, which cost $597,000 on their job cost sheets.
Lastly, please fill in cost of goods sold and finished goods at the bottom of the entries, and explain how you arrived at the values.
Instructions:
1. Make journal entries to record the transactions listed above. Also, please fill in cost of goods sold and finished goods at the bottom of the entries, and explain how you arrived at the values.
Date (a, b, c, etc.)	Account Titles	PR	Debit	Credit
a.
Cost of goods sold
Finished Goods