Problem 4 (Textbook Reference: P24) Demonstrate job costing Log Cabin Homes, Inc. uses a job cost system to account for its jobs, which are prefabricated houses. As of January 1, 2014, its records showed inventories as follows: Materials and supplies Work in process (Job Nos. 22 and 23) Finished goods (Job No. 21) S 100,000 180,000 140,000 The work in process inventory consisted of two jobs: Direct Manufacturing MaterialsDirect Labor $ 36,000 Job No Overhead 40,000 S 28,000 S S 68,000 S 20,000 16.000 S 84.000 36.000 $180,000 23 S76,000 Cost and sales data for 2014: Materials purchased on account, $400,000. 2. 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-hours. 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 3. 4. 5. Job Nos. 22 and 23 were completed and transferred to Finished Goods Inventory 6. Job Nos. 21 and 22 were sold on account for $1,200,000, total 7. Manufacturing overhead costs incurred, other than indirect materials and indirect labor, were depreciation, $80,000, and heat, light, power, miscellaneous, $40,000. Required a. Prepare journal entries to assign the preceding costs to jobs. Show the appropriate entries debiting Finished Goods Inventory and Cost of Goods Sold. Transfer overapplied or underapplied overhead to Cost of Goods Sold. (Hint Recreate the T-Account Template we made together in class to keep track of your job casts before you record your journal entries. A T-Account template has been provided on the next page) Assuming selling and administrative expenses were S100,000, prepare and income statement for 2014 b. Chart of Accounts ts Pavable counts Receivable ed I Finished Goods Inventory Sales Revenue WIP Inventory- Job No. 22 WIP Inventory- Job No. 23 WIP Inventory- Job No. 24 Manufacturng Overhead aterials Inventory Payrol Sunn cation ost of Goods SolH I. JE #1: To record the purchase of direct materials. Journal Entry Debit Credit 2 JE#2: To record direct and indirect materials issued. Journal Entry Debit Credit 3, JE #3: To distribute factory labor costs incurred. Journal Entry Debit Credit 4, JE #4: To record a cation of overhead to Journal Entry Debit Credit JE #5: To record comp on of Job Nos, 22 and 23 Journal Entry Debit Credit JE #6: To record sales and cost of goods sold of Job Nos. 21 and 22 of Journal Entry Debit Credit 7, JE #7: To record additional overhead costs incurred. Journal Entry Debit Credit 8, JE #8: To dis pone of undera led manufacturing overhead. Journal Entry Debit Credit Log Cabin Homes, Inc. Income State ment For the Year Ended December 31, 2014 Sales Revenue Less: Adjusted Cost of Goods Sok Gross M Less: and Adminstrative E ng Income