Chapter 19 Problem 4A

Watercraft's predetermined overhead rate is 200%. Information on the company's production activities during May follows:

May 1 - Purchased raw materials on credit $200,000

Material requisitions record use of the following for the month.

Time tickets record the use of the following labor for the month (These wages were paid in cash).

May 8 - Applied overhead to Jobs 136, 138, and 139.

May 12 - Transferred Jobs 136, 138, and 139 to Finished Goods Inventory

May 13 - Sold Jobs 136 and 138 on credit at a total price of $525,000.

May 14 - Recorded Cost of Goods sold for Jobs 136 and 138.

May 22 - Incurred the following actual other overhead costs during the month:

May 31 - Applied overhead at the month-end to the Work in Process Inventory account (for Job 137 and Job 140) using the predetermined overhead rate of 200% of direct labor cost.

Required:

A. Prepare a job cost sheet for each job worked during the month. Use the following simplified form:

B. Prepare the journal entries for the transactions during the month of May.

C. Set up T-accounts for the following accounts: Raw Materials Inventory, Work in Process Inventory, Finished Goods Inventory, Factory Overhead, Cost of Goods Sold. Each started the month with a zero balance. Post the entries to these T-accounts and determine the month-ending balance.

D. Compute the total cost of each job in process and prove the sum of their costs equals the Work In Process Inventory account. Compute the total cost of each job finished but not sold, and prove that the sum of their costs equals the Finished Goods Inventory Balance. Compute the total cost of each job sold, and prove the sum of their costs equals the Cost of Goods Sold balance.

\begin{tabular}{lr} \hline Job 136 & $12,000 \\ Job 137 & 10,500 \\ Job 138 & 37,500 \\ Job 139 & 39,000 \\ Job 140 & 3,000 \\ Total direct labor & 102,000 \\ Indirect labor & 24,000 \\ \hline Total labor cost & 26,000 \\ \hline \end{tabular} DepreciationoffactorybuildingDepreciationoffactoryequipmentExpiredfactoryinsuranceAccruedpropertytaxespayable$68,00036,50010,00035,000 \begin{tabular}{|ll|} \hline Job No. & \\ \hline Materials & $ \\ Labor & $ \\ Overhead & $ \\ Total cost & $ \\ \hline \end{tabular}