Custom Cabinetry has one job in process Job 120 as of June 3

Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $8,700, direct labor of $3,500, and applied overhead of $2,800. Custom Cabinetry applies overhead at the rate of 80% of direct labor cost. During July, Job 120 is sold (on account) for $30,000, Job 121 is started and completed, and Job 122 is started and still in process at the end of the month. Custom Cabinetry incurs the following costs during July July Product Costs Direct materials Direct labor Overhead applied Job 120 Job 121 Job 122 Total $1,100 $8,300 $2,800 $12,200 3,100 4,100 2,700 9,900 1. Prepare journal entries for the following in July. a. Direct materials used in production. b. Direct labor used in production. c. Overhead applied. d. The sale of Job 120 e. Cost of goods sold for Job 120. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory general ledger accounts. (Assume there are no jobs in Finished Goods Inventory as of June 30.)

Solution

Job sheet job 120 job121 job122 Total Beginning bal Direct materials 8,700 8,700 Direct labor 3,500 3,500 applied overhead 2,800 2,800 Total beginning bal 15,000 15,000 cost added during the year Direct materials 1,100 8,300 2,800 12,200 Direct labor 3,100 4,100 2,700 9,900 applied overhead 2480 3280 2160 7920 total cost added during the year 6,680 15680 7660 30,020 total cost of job 21,680 15680 7660 45,020 1) Journal entries No.                General Journal                       Debit Credit a. Work in process inventory 12,200 Raw materials inventory 12,200 b. Work in process inventory 9,900 factory wages payable 9,900 c. work in process inventory 7,920 Manufacturing overhead 7,920 d. Account receivable 30,000 Sales 30,000 e. Cost of goods sold 21,680 Finished goods inventory 21,680 2) Work in process inventory Beg bal 15,000 Finished 37,360 a. 12,200 goods b. 9,900 c. 7,920 End bal 7,660 Finished goods inventory Beg.bal 0 COGS 21,680 WIP 37,360 End bal 15,680