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The Polaris Company uses a job-order costing system. The following transactions occurred in October: Raw materials purchased...

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Accounting

The Polaris Company uses a job-order costing system. Thefollowing transactions occurred in October:

Raw materials purchased on account, $210,000.

Raw materials used in production, $189,000 ($151,200 directmaterials and $37,800 indirect materials).

Accrued direct labor cost of $49,000 and indirect labor cost of$20,000.

Depreciation recorded on factory equipment, $106,000.

Other manufacturing overhead costs accrued during October,$130,000.

The company applies manufacturing overhead cost to productionusing a predetermined rate of $6 per machine-hour. A total of76,200 machine-hours were used in October.

Jobs costing $511,000 according to their job cost sheets werecompleted during October and transferred to Finished Goods.

Jobs that had cost $452,000 to complete according to their jobcost sheets were shipped to customers during the month. These jobswere sold on account at 28% above cost.

Required:

1. Prepare journal entries to record the transactions givenabove.

2. Prepare T-accounts for Manufacturing Overhead and Work inProcess. Post the relevant transactions from above to each account.Compute the ending balance in each account, assuming that Work inProcess has a beginning balance of $36,000.

Answer & Explanation Solved by verified expert
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SOLUTION:

1) Journal entries:

Particulars

Debit

Credit

a

Raw materials inventory

210,000

Accounts payable

210,000

b

Work in process

189,000

Manufacturing overhead

151,200

Raw materials inventory

37,800

c

Work in process

49,000

Manufacturing overhead

20,000

Salaries and wages payable

69,000

d

Manufacturing overhead

106,000

Accumulated depreciation

106,000

e

Manufacturing overhead

130,000

Accounts payable

130,000

f

Work in process

457,200

Manufacturing overhead

457,200

g

Finished goods

511,000

Work in process

511,000

h

Accounts receivable

578,560

Sales

578,560

i

Cost of goods sold

452,000

Finished goods

452,000

2)

Manufacturing overhead

(b)

37,800

(f)

457,200

(c )

20,000

(d)

106,000

(e )

130,000

Ending balance

163,400

Work in Process

Beginning balance

36,000

(g)

511,000

(b)

151,200

(c )

49,000

(f)

457,200

Ending balance

182,400

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