Watkins Machinery Company uses a normal job costing system. The company has the following partial trial balance information for March, the last month of its fiscal year: Materials inventory (x, $4,500; Y, $3,000; Indirect materials, $7,500) Work-in-process inventory (this is Job 101) Finished goods inventory (this is Job 100) $ 15,000 8,400 14,000 These transactions relate to the month of March: a. Purchased direct materials and indirect materials with the following summary of receiving reports: Material x Material Y Indirect materials Total $ 15,000 15,000 7,500 $ 37,500 b. Issued direct materials and indirect materials with this summary of requisitions: Material x Material Y Subtotal Indirect materials Total Job 101 $ 7,500 6,000 $ 13,500 Job 102 $ 4,500 3,000 $ 7,500 Total $ 12,000 9,000 $ 21,000 12,000 $ 33,000 c. Factory labor incurred is summarized by these time tickets: Job 101 Job 102 Indirect labor Total $ 16,800 11,200 7,500 $ 35,500 d. Factory utilities, factory depreciation, and factory insurance incurred is summarized as follows: Utilities Depreciation Insurance Total $ 750 22,500 3,750 $ 27,000 e. Factory overhead costs were applied to jobs at the predetermined rate of $15 per machine hour. Job 101 incurred 1,800 machine hours; Job 102 used 1,200 machine hours. f. Job 101 was completed; Job 102 was still in process at the end of March. g. Job 100 and Job 101 were shipped to customers during March. Both jobs had gross margins of 20% based on manufacturing cost. h. The company closed the overapplied or underapplied overhead to the Cost of Goods Sold account at the end of March. Required: 1. Prepare journal entries to record the transactions for the events from parts (a) through (g). 2. Compute the ending balance of the Work-in-process inventory account. 3. Compute the overhead variance and indicate whether it is overapplied or underapplied. 4. Close the overhead variance to the Cost of goods sold account. Journal entry worksheet To record the purchase of direct materials and indirect materials. Note: Enter debits before credits. Transaction General Journal Debit Credit (a) Record entry Clear entry View general journal Journal entry worksheet To record factory labor incurred. Note: Enter debits before credits. Transaction General Journal Debit Credit (c) Record entry Clear entry View general journal Journal entry worksheet To record the completion of Job 101. Note: Enter debits before credits. Transaction General Journal Debit Credit (f) Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 5 6 7 8 To record the total sales revenue of Jobs 100 and 101. Note: Enter debits before credits. Transaction General Journal Debit Credit (g) Record entry Clear entry View general journal Journal entry worksheet 2 3 4 5 6 7 8 To record the total cost of goods sold. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Compute the ending balance of the Work-in-process inventory account. Direct materials Direct labor Factory overhead applied Total ending balance Compute the overhead variance and indicate whether it is overapplied or underapplied. Actual factory overhead Indirect materials Indirect labor Utilities Depreciation Insurance Journal entry worksheet 1 To record the disposition of underapplied factory overhead by closing the Factory overhead account to the Cost of goods sold account. Note: Enter debits before credits. Transaction General Journal Debit Credit (h) Record entry Clear entry View general journal
