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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:

  1. Materials purchased on account, $60,100.
  2. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,700.
  3. Payroll for the month: direct labor, $75,000; indirect labor, $35,000; administrative, $28,000; sales, $19,000.
  4. Depreciation on factory plant and equipment, $10,500.
  5. Property taxes on the factory accrued during the month, $1,450.
  6. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
  7. Factory utilities, $5,500.
  8. Advertising paid with cash, $7,900.
  9. Depreciation on office equipment, $800; on sales vehicles, $1,680.
  10. Legal fees incurred but not yet paid for preparation of lease agreements, $750.
  11. 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.
  12. 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 $____-

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