Mathews Guitar Company makes high-quality customized guitars. Mathews uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $88,000 and that 17,600 direct labor hours would be worked. At year-end, Dave, the company's founder and CEO, gives you the following information regarding Mathew's operations: 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $5,200 Work in Process Inventory $35,400 Finished Goods Inventory $48,400 2. During the year, the company purchased raw materials costing $81,000. All purchases were on account. 3. The production department requisitioned $60, 000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials. 4. The company used 21, 100 direct labor hours at a cost of $13 per hour during the year (credit Wages Payable). The company used 4,600 indirect labor hours at a cost of $10 per hour (credit Wages Payable). The company paid $46,700 for insurance, utilities, and property taxes on the factory. All payments were cash payments. The company recorded factory depreciation of $15,600. The company applied manufacturing overhead to inventory based on the 21, 100 labor hours actually worked during the year. Products costing $400, 000 were completed during the year and transferred to the Finished Goods Inventory. During the year, the company sold products costing a total of $405,000. The company closes under- and over applied overhead to Cost of Goods Sold. Prepare journal entries for each of the transactions just listed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Mathews Guitar Company makes high-quality customized guitars. Mathews uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $88,000 and that 17,600 direct labor hours would be worked. At year-end, Dave, the company's founder and CEO, gives you the following information regarding Mathew's operations: 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $5,200 Work in Process Inventory $35,400 Finished Goods Inventory $48,400 2. During the year, the company purchased raw materials costing $81,000. All purchases were on account. 3. The production department requisitioned $60, 000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials. 4. The company used 21, 100 direct labor hours at a cost of $13 per hour during the year (credit Wages Payable). The company used 4,600 indirect labor hours at a cost of $10 per hour (credit Wages Payable). The company paid $46,700 for insurance, utilities, and property taxes on the factory. All payments were cash payments. The company recorded factory depreciation of $15,600. The company applied manufacturing overhead to inventory based on the 21, 100 labor hours actually worked during the year. Products costing $400, 000 were completed during the year and transferred to the Finished Goods Inventory. During the year, the company sold products costing a total of $405,000. The company closes under- and over applied overhead to Cost of Goods Sold. Prepare journal entries for each of the transactions just listed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
