The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials purchased
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Question:
The Polaris Company uses a job-order costing system. The following transactions occurred in October:
- Raw materials purchased on account, $209,000.
- Raw materials used in production, $191,000 ($152,800 direct materials and $38,200 indirect materials).
- Accrued direct labor cost of $49,000 and indirect labor cost of $21,000.
- Depreciation recorded on factory equipment, $104,000.
- Other manufacturing overhead costs accrued during October, $130,000.
- The company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. A total of 76,000 machine-hours were used in October.
- Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
- Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 28% above cost.
Required:
1. Prepare journal entries to record the transactions given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $33,000.
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