P3.32A (LO 2, 3, 4, 5) For the year ended December 31, 2020, the job cost sheets of DeVoe Company contained the following data:

Prepare entries in a job-order cost system and a partial income statement.

Job Number

Explanation

Direct

Materials

Direct

Labour

Manufacturing

Overhead

Total

Costs

7640

Balance 1/1

$25,000

$24,000

$28,800

$77,800

Current year's costs

30,000

36,000

43,200

109,200

7641

Balance 1/1

11,000

18,000

21,600

50,600

Current year's costs

43,000

48,000

57,600

148,600

7642

Current year's costs

58,000

55,000

66,000

179,000

Other data:

1. Raw materials inventory totalled $15,000 on January 1. During the year, $140,000 of raw materials were purchased on account.

2. Finished goods on January 1 consisted of Job No. 7638 for $87,000 and Job No. 7639 for $92,000.

3. Job No. 7640 and Job No. 7641 were completed during the year.

4. Jobs 7638, 7639, and 7641 were sold on account for $530,000 in total.

5. Manufacturing overhead incurred on account totalled $120,000.

6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labour $18,000, and depreciation on factory machinery $8,000.

Instructions

a. Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. (Hint: Use a single T account for Work in Process Inventory.) Calculate each of the following, then post each to the T account: (1) beginning balance, (2) direct materials, (3) direct labour, (4) manufacturing overhead, and (5) completed jobs.

Job 7642: $179,000

b. Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold.

Amount = $6,800

c. Determine the gross profit to be reported for 2020.

$158,600