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The Smith company uses a job -order cost system and applies

manufacturing overhead costs to jobs on the basis of direct labor

cost. At the beginning of the most recent year the following

estimates were made as a basis for computing the predetermined

overhead rate for the year: manufacturing overhead cost

$340,000, direct labor cost $170,000. The following transactions

took place during the year (note all purchases and services

were acquired on account.)

A. Raw materials were purchased on account $150,000

B. Raw materials requisition used in production

Direct materials $108,000

Indirect materials $32.000

C. Advertising costs were incurred $35,000

D. salary and wages incurred as follows

Direct labor $150.000

Indirect labor $90,000

Selling and admin salaries $125,000

E. maintenance cost incurred in the factory $45,000

F. Insurance expired during the year $25,0000(60% relates to

the factory, the remainder is on selling and administrative

items.)

G. Depreciation recorded for the year $90,000 (70% relates to

the factory assets, the remainder relates selling and

administrative assets.)

H. Rental cost incurred on the building $120,000 (80% of the

space is occupied by the factory the remainder occupied by

offices.)

I. Manufacturing overhead cost was applied to jobs.

?

J. Goods costing $450,000 were completed and moved to the

warehouse.

K. Sales for the year were 750,000. The cost of goods

manufactured these items were $400.000.

Required

1. Record journal entries for each of the above items.

2. is manufacturing overhead applied or under applied by

much?

3. record a journal entry to close manufacturing overhead to

cost of goods sold.

4. Prepare an income statement for the year.

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