Job Cost Journal Entries Prior to the beginning of 2016 Lowe

Job Cost Journal Entries Prior to the beginning of 2016, Lowe Company estimated that it would incur $264,000 of manufacturing overhead cost during 2016 using 24,000 direct labor hours to produce the desired volume of goods. On January 1,2016, beginning balances of Materials Inventory, Work in Process Inventory, and Finished Goods Inventory were $42,000, $-0-, and $64,500, respectively Required Prepare general journal entries to record the following for 2016 a. Purchased materials on account, $58,500. Description Debit Credit b.Of the total dollar value af materials used, $46,500 represented direct material and $16,500 indirect material Description Debit Credit Work in process inventory c. Determined total factory labor, $202,500 (22,500 hrs.@ $9/hr) d, of the factory labor, 80% was direct and 20% indirect. Descriptiorn Debit Credit Work in process inventory

Solution

Journal Entry Date Particulars Dr. Amt. Cr. Amt. a. Materials Inventory      58,500.00 Accounts Payable      58,500.00 (record the purchase of inventory) b. Work in Process      46,500.00 Manufacturing Overhead      16,500.00 Material Inventory      63,000.00 (record the raw material issued) c. Salaries & Wages Expenses    202,500.00 Salaries & Wages Payable    202,500.00 (record the Salaries & Wages expenses) d. Work in Process    162,000.00 $202,500 X 80% Manufacturing Overhead      40,500.00 $202,500 X 20% Salaries & Wages Expenses    202,500.00 (record the factory payroll) e. Work in Process    247,500.00 Manufacturing Overhead    247,500.00 (record the manufacturing overhead applied) Predetermined Overhead Rate = $264,000 (Extimated Overhead) / 24,000 DLH Predetermined Overhead Rate = $11 per DLH Manufacturing Overhead Applied = 22,500 DLH X $11 = $247,500 f. Manufacturing Overhead    138,000.00 Accounts Payable    138,000.00 (Record the other manufacturing overhead) g-1 Finished Goods Inventory    408,000.00 Work in Process    408,000.00 (Record the Finsihed Goods transferred) g-2. Cost of Goods Sold    387,000.00 Finished Goods inventory    387,000.00 (record the Cost of Goods Sold) h. Manufacturing Overhead      52,500.00 Cost of Goods Sold      52,500.00 (Record the overapplied overhead) Work in Process Finished Goods Inventory Beg. Bal.                     -      408,000.00 g-1 Beg. Bal.      64,500.00    387,000.00 g-2. b.      46,500.00 g-1    408,000.00 d.    162,000.00 e.    247,500.00 End. Bal.      48,000.00 End. Bal.      85,500.00 Manufacturing Overhead Beg. Bal.                     -      247,500.00 e. b.      16,500.00 d.      40,500.00 f.    138,000.00 h.      52,500.00 End. Bal.                     -