Question
Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold During May, the following transactions were completed and reported by Jerico Company: Materials purchased on account,
Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold
During May, the following transactions were completed and reported by Jerico Company:
- Materials purchased on account, $60,100.
- Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,700.
- Payroll for the month: direct labor, $75,000; indirect labor, $35,000; administrative, $28,000; sales, $19,000.
- Depreciation on factory plant and equipment, $10,500.
- Property taxes on the factory accrued during the month, $1,450.
- Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
- Factory utilities, $5,500.
- Advertising paid with cash, $7,900.
- Depreciation on office equipment, $800; on sales vehicles, $1,680.
- Legal fees incurred but not yet paid for preparation of lease agreements, $750.
- Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month.
- Cost of jobs completed during the month, $150,000.
The company also reported the following beginning balances in its inventory accounts:
Materials Inventory | $7,500 |
Work-in-Process Inventory | 37,000 |
Finished Goods Inventory | 50,000 |
Required:
1. Prepare journal entries to record the transactions occurring in May. For a compound transaction, if an amount box does not require an entry, leave it blank.
a. | Materials | ||
Accounts Payable | |||
b. | Work in Process | ||
Overhead Control | |||
Materials | |||
c. | Work in Process | ||
Overhead Control | |||
Administrative Expense | |||
Selling Expense | |||
Wages Payable | |||
d. | Overhead Control | ||
Accumulated Depreciation | |||
e. | Overhead Control | ||
Property Taxes Payable | |||
f. | Overhead Control | ||
Prepaid Insurance | |||
g. | Overhead Control | ||
Utilities Payable | |||
h. | Selling Expense | ||
Cash | |||
i. | Administrative Expense | ||
Selling Expense | |||
Accumulated Depreciation | |||
j. | Administrative Expense | ||
Accounts Payable | |||
k. | Work in Process | ||
Overhead Control | |||
l. | Finished Goods | ||
Work in Process |
Consider each line of data to determine which accounts are affected and whether the account is to be debited or credited.
2. Prepare T-accounts for Materials Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post the entries to the T-account in the same order in which they were journalized.
Materials Inventory | |||
---|---|---|---|
Balance | (b) | ||
(a) | |||
Balance |
Work in Process Inventory | |||
---|---|---|---|
Balance | (l) | ||
(b) | |||
(c) | |||
(k) | |||
Balance |
Finished Goods Inventory | |||
---|---|---|---|
Balance | |||
(l) | |||
Balance |
Overhead Control | |||
---|---|---|---|
(b) | (k) | ||
(c) | |||
(d) | |||
(e) | |||
(f) | |||
(g) | |||
Balance |
3. Prepare a statement of cost of goods manufactured.
Jerico Company | ||
Statement of Cost of Goods Manufactured | ||
For the Month Ended May 31, 20XX | ||
Direct materials | $ | |
Direct labor | ||
Overhead: | ||
Supplies | $ | |
Indirect labor | ||
Depreciation, plant, and equipment | ||
Property taxes | ||
Utilities, factory | ||
Insurance | ||
$ | ||
Add: Overapplied overhead | ||
Overhead applied | ||
Manufacturing costs added | $ | |
Add: Beginning work in process | ||
Less: Ending work in process | ||
Cost of goods manufactured | $ |
4. If the overhead variance is all allocated to cost of goods sold, by how much will cost of goods sold decrease or increase? Decreases by $____-
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started