Question
Exercise 3-5 (Algo) Journal Entries and T-accounts [LO3-1, LO3-2] The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials
Exercise 3-5 (Algo) Journal Entries and T-accounts [LO3-1, LO3-2]
The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials purchased on account, $210,000. Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials). The accrued direct labor cost of $49,000 and indirect labor cost of $21,000. Depreciation recorded on factory equipment, $105,000. Other manufacturing overhead costs accrued during October, $131,000. The company applies manufacturing overhead costs to production using a predetermined rate of $9 per machine hour. A total of 76,300 machine hours were used in October. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. Jobs that had cost $447,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 34% 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 $34,000.
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