Step #3: Now, enter the transactions and adjustments for January. While the computer will post the transactions to the accounts in the general ledger, you should use the job cost cards as necessary. When youve entered all of the transactions, print your income statement and balance sheet.

1/3 Received $10,000 from customers paying on account.

1/5 Purchased raw materials on account from Smith Co. for $115,000.

1/12 Requisitioned raw materials from the warehouse for Job #107 Total $25,000.

1/16 Made a partial payment of $50,000 on the materials purchased on January 5 and issued a 60-day, 6% note payable for the balance.

1/18 Requisitioned raw materials from the warehouse for Job #108 Total $50,000.

1/31 Direct labor for the month was used as follows:

Job #107 -- $36,000

Job #108 -- $70,000

The direct labor employees were paid in cash (no withholdings).

1/31 Paid $55,000 for Indirect Labor. (No withholdings.)

1/31 Paid administrative salaries for the month of $3,500 and sales salaries of $1,500. (No withholdings.)

1/31 Received and paid the utility bill of $1,750. The company determined that $1,400 related to the factory and $350 to selling and administrative activities.

1/31 Estimated property taxes for the month at $800. Allocate $650 to the factory and $150 to selling and administrative activities.

1/31 Prepare the adjusting entry to accrue interest on the 1/16 note to Smith Company.

1/31 Prepare adjusting entries for depreciation for one month. Use straight-line depreciation and no salvage value.

Factory Building 40-year life

Factory Machinery 20-year life

Office Building 20-year life

Office Equipment 10-year life

1/31 Factory overhead is applied to production at 50% of direct labor dollars. Prepare the entry.

1/31 Job #107 is complete. Prepare the necessary entry.

1/31 The remainder of Job#106 and 1,800 units of Job #107 are sold for cash of $195,000. Prepare the necessary entry (or entries).

1/31 If there is any over or underapplied manufacturing overhead, close the amount into Cost of Goods Sold. Hint view the Manufacturing Overhead account in the General Ledger.

Dont forget to complete the questions and the Schedule of Cost of Goods Manufactured & Sold that appear at the end of this document.

The following Job Cost Sheets are for your benefit only and do not need to be submitted.

Job Cost Sheet Job Order No. 106 Type: A gadgets Units: 2,440 Begun: 11/1 Completed: 11/30
	Direct Labor	Overhead
$39,500	$55,000	$27,500
Cost Summary Direct materials___$39,500____ Cost per unit $50 (122,000/2440) Direct labor ____55,000____ Units sold: ___2000_______ Overhead _ 27,500___ Units remaining 440 Total ____$122,000_____

Job Cost Sheet Job Order No. 107 Type: ______ Units: 2000 Begun: 11/1 Completed: ___
Direct Materials	Direct Labor	Applied Overhead
$5,400	$6,400	$3,200
Cost Summary Direct materials__________ Cost per unit Direct labor __________ Units sold: ________ Overhead ________ Units remaining Total ________________

Job Cost Sheet Job Order No. 108
Direct Materials	Direct Labor	Applied Overhead
Cost Summary Direct materials________________ Cost per unit Direct labor ________________ Units sold: __________ Overhead _______________ Units remaining Total ________________

Questions for Job Order Problem

Answer the following:

1. In January you purchased $115,000 of raw materials. How much, in dollars, of raw materials were used in production during January?

2. Give one reason why a company would use a predetermined overhead application rate rather than apply the actual amount of factory overhead incurred?

3. You were asked to close the over or underapplied overhead into the cost of goods sold. Explain another way to dispose of the under or overapplied overhead.

4. Create a Statement of the Cost of Goods Manufactured and Sold for this company for January. (See Chapters 14 and 15 for examples. You may submit this using Excel rather than typing in word format.)