Exercise 17.7 (Static) Journal Entries, Cost Flows, and Determining Account Balances (LO17-3, LO17-4, LO17-5)

Zelda Manufacturing organized in June and recorded the following transactions during its first month of operations.

1. Purchased materials costing $800,000.

2. Used direct materials in production costing $485,000.

3. Applied direct labor costs of $500,000 to various jobs.

4. Applied manufacturing overhead at a rate of $10 per direct labor hour. (Direct labor workers earn $20 per hour.)

5. Incurred actual manufacturing overhead costs of $245,000 (credit Various Accounts).

6. Transferred completed jobs costing $745,000 to finished goods.

7. Sold completed jobs for $1,000,000 on account. The cost applied to the jobs sold totaled $615,000.

8. Closed the Manufacturing Overhead account directly to Cost of Goods Sold on June 30.

a. Prepare a journal entry for each of the eight transactions listed above.

b. Compute the balance of the Cost of Goods Sold account at June 30.

c. Determine the company's inventory balances at the end of June.