Log Cabin Homes, Inc , uses a job cost system to account for its jobs, which are prefabricated houses As of January 1, 2019, its records showed inventories as follows Materials and supplies $ 100,000 Work in process (Job Nos 22 and 23) 180,000 Finished goods (Job No 21) 140,000 The work in process inventory consisted of two jobs Job No Direct Materials Direct Labor Mfg Overhead Total 22 $ 36,000 $ 40,000 $ 20,000 $ 96,000 23 40,000 28,000 16,000 84,000 $ 76,000 $ 68,000 $ 36,000 $180,000 Cost and sales data for 2019 Materials purchased on account, $400,000 Direct materials used Job No 22, $60,000 Job No 23, $120,000 Job No 24, $180,000 Indirect materials used, $10,000 Direct labor costs Job No 22, $100,000 Job No 23, $200,000 and Job No 24, $80,000 Indirect labor costs, $80,000 Overhead is assigned to jobs at $100 per machine hour Job No 22 used 500 machine hours, Job No 23 used 1,000 machine hours, and Job No 24 used 300 machine hours in January Job Nos 22 and 23 were completed and transferred to Finished Goods Inventory Job Nos 21 and 22 were sold on account for $1,200,000, total Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation, $80,000, and heat, light, power, miscellaneous, $40,000 a Create journal entries (using the T account format) to assign the preceding costs to jobs, and be sure to establish the beginning balance in the T account (See sample T account format below) Materials WIP Inventory WIP Inventory Dr Inventory Cr Dr Job No 21 Cr Dr Job No 22 Cr Beg Inv Beg Inv Materials Labor Overhead Total Payroll WIP Inventory WIP Inventory Dr Summary Cr Dr Job No 23 Cr Dr Job No 24 Cr Beg Inv Materials Labor Overhead Total Manufacturing Finished Goods Cost of Dr Overhead Cr Dr Inventory Cr Dr Goods Sold Cr FARSIDE MANUFACTURING COMPANY Income Statement For the Year Ended December 31, 2019 Sales $1,800,000 Cost of goods sold Finished goods inventory, January 1 $ 50,000 Cost of goods manufactured (see statement of cost of goods manufactured in Exhibit 17 5) 1,100,000 Cost of goods available for sale $1, 150,000 Less Finished goods inventory, December 31 60,000 Cost of goods sold 1,090,000 Gross margin $ 710,000 Operating expenses Selling expenses $ 300,000 Administrative expenses 200,000 Total operating expenses 500,000 Income from operations $ 210,000 Note Income statements presented in external financial statements also include nonoperating revenues and expenses and income taxes

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 23, 2024

Log Cabin Homes, Inc., uses a job cost system to account for its jobs, which are prefabricated houses. As of January 1, 2019, its records

Log Cabin Homes, Inc., uses a job cost system to account for its jobs, which are prefabricated houses. As of January 1, 2019, its records showed inventories as follows:

Materials and supplies $ 100,000

Work in process (Job Nos. 22 and 23) 180,000

Finished goods (Job No. 21) 140,000

The work in process inventory consisted of two jobs:

Job No. Direct Materials Direct Labor Mfg. Overhead Total

22 $ 36,000 $ 40,000 $ 20,000 $ 96,000

23 40,000 28,000 16,000 84,000

$ 76,000 $ 68,000 $ 36,000 $180,000

Cost and sales data for 2019:

Materials purchased on account, $400,000.
Direct materials used: Job No. 22, $60,000; Job No. 23, $120,000; Job No. 24, $180,000. Indirect materials used, $10,000.
Direct labor costs: Job No. 22, $100,000; Job No. 23, $200,000; and Job No. 24, $80,000. Indirect labor costs, $80,000.
Overhead is assigned to jobs at $100 per machine-hour. Job No. 22 used 500 machine-hours, Job No. 23 used 1,000 machine-hours, and Job No. 24 used 300 machine-hours in January.
Job Nos. 22 and 23 were completed and transferred to Finished Goods Inventory.
Job Nos. 21 and 22 were sold on account for $1,200,000, total.
Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation, $80,000, and heat, light, power, miscellaneous, $40,000.

a.Create journal entries (using the T-account format) to assign the preceding costs to jobs, and be sure to establish the beginning balance in the T-account.(See sample T-account format below).

Materials WIP Inventory - WIP Inventory - Dr. Inventory Cr. Dr. Job No. 21 Cr. Dr Job No. 22 Cr. Beg. Inv. Beg. Inv. Materials Labor Overhead Total Payroll WIP Inventory - WIP Inventory - Dr. Summary Cr. Dr. Job No. 23 Cr. Dr. Job No. 24 Cr. Beg. Inv. Materials Labor Overhead Total Manufacturing Finished Goods Cost of Dr. Overhead Cr. Dr. Inventory Cr. Dr. Goods Sold Cr.FARSIDE MANUFACTURING COMPANY Income Statement For the Year Ended December 31, 2019 Sales $1,800,000 Cost of goods sold: Finished goods inventory, January 1 $ 50,000 Cost of goods manufactured (see statement of cost of goods manufactured in Exhibit 17.5) 1,100,000 Cost of goods available for sale $1, 150,000 Less: Finished goods inventory, December 31 60,000 Cost of goods sold 1,090,000 Gross margin $ 710,000 Operating expenses: Selling expenses $ 300,000 Administrative expenses 200,000 Total operating expenses 500,000 Income from operations $ 210,000 Note: Income statements presented in external financial statements also include nonoperating revenues and expenses and income taxes