Problem 15-3A Source documents, journal entries, and accounts in job order costing LO P1, P2, P3

[The following information applies to the questions displayed below.] Widmer Watercrafts predetermined overhead rate for the year 2017 is 200% of direct labor. Information on the companys production activities during May 2017 follows.

1. Purchased raw materials on credit, $260,000.
2. Materials requisitions record use of the following materials for the month.

Job 136	$	49,500
Job 137		33,000
Job 138		19,400
Job 139		22,800
Job 140		7,000
Total direct materials		131,700
Indirect materials		21,000
Total materials used	$	152,700

3. Paid $15,250 cash to a computer consultant to reprogram factory equipment.
4. Time tickets record use of the following labor for the month. These wages were paid in cash.

Job 136	$	12,300
Job 137		10,800
Job 138		37,900
Job 139		39,200
Job 140		4,000
Total direct labor		104,200
Indirect labor		26,000
Total	$	130,200

5. Applied overhead to Jobs 136, 138, and 139.
6. Transferred Jobs 136, 138, and 139 to Finished Goods.
7. Sold Jobs 136 and 138 on credit at a total price of $540,000.
8. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building	$	68,500
Depreciation of factory equipment		37,500
Expired factory insurance		11,000
Accrued property taxes payable		36,500

9. Applied overhead at month-end to the Work in Process Inventory account (Jobs 137 and 140) using the predetermined overhead rate of 200% of direct labor cost.

Problem 15-3A Part 1

Required: 1. Prepare a job cost sheet for each job worked on during the month.

	Job No. 136	Job No. 137	Job No. 138	Job No. 139	Job No. 140
Materials
Labor
Overhead
Total cost	$0	$0	$0	$0	$0

Problem 15-3A Part 2

2. Prepare journal entries to record the events and transactions a through i.

• 1

  Record raw material purchases on credit.

• 2

  Record the requisition of direct and indirect materials.

• 3

  Record payment to computer consultant to reprogram factory equipment.

• 4

  Record the entry for direct and indirect labor, paid in cash.

• 5

  Record the entry to apply overhead to jobs 136, 138 and 139.

• 6

  Record the transfer of completed jobs 136,138 and 139 to finished goods.

• 7

  Record the entry for sales on account for Jobs 136 and 138.

• 8

  Record the entry for the cost of sales of Jobs 136 and 138.

• 9

  Record other factory overhead (depreciation, insurance and property taxes).

• 10

  Record the entry to apply overhead to Jobs 137 and 140 (Work in Process).

Problem 15-3A Part 3

3. Post the journal entries for the transactions to the following T-accounts, each of which started the month with a zero balance.

Raw Materials Inventory					Work in Process Inventory
End.bal.	0
					End.bal.	0
Factory Overhead					Finished Goods Inventory
					End.bal.	0
End.bal.	0
Cost of Goods Sold
End.bal.	0

Problem 15-3A Part 4

4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Work in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.

Report of Job Costs
Work in Process Inventory
Balance	0
Finished Goods Inventory
Balance	0
Cost of Goods Sold
Balance	$0