Prepare the journal entries to record the following transact

Prepare the journal entries to record the following transactions for Kilts & More, a company that produces hand-sewn kilts to Americans celebrating at Irish Festivals around the country.

a. Purchased $140,000 of material (3,500 yards) in cash.
b. Issued $120,000 of material (3,000 yards) into production.
c. Paid $45,000 cash in production labor costs.
d. Applied overhead at the predetermined rate of $12 per yard.
e. Incurred $42,000 of actual overhead costs, paid in cash. (Assume any difference between actual and applied overhead costs is adjusted directly to cost of goods sold.)
f. Completed 5,000 kilts. (Approximately $51,000 of inventory remains in process, so the cost of each helmet is approximately $______.)
g. Sold 4,500 kilts at $80.00 per unit. (All proceeds were collected in cash.)
h. Disposed of any over- or under-applied overhead cost.  

Solution

Journal Entries date Account titles& Explanation Debit credit a. Purchased $140,000 of material (3,500 yards) in cash Raw materials A/c $140000         To cash A/c $140000 (Being Pourchase of raw materials Has been recorded) (b) Issued $120,000 of material (3,000 yards) into production Work In Process A/c $120000            To Raw materials A/c $120000 (being raw materials issued for production has been recorded) c. Paid $45,000 cash in production labor costs. labour costs A/c $45000            To cash A/c $45000 (being Payment of labour cost has been recorded) Work In Process A/c $45000           To Labour costs A/c $45000 (Being labour costs has been transferred to Work in process) (d) Applied overhead at the predetermined rate of $12 per yard. Work In Process A/c   (3000*$12) $36000         To manufacturing Over head A/c $36000 (being Manufactruing over head appied has been recorded) (e ) Incurred $42,000 of actual overhead costs, paid in cash manufacturing Over head A/c $42000          To cash A/c $42000 (being cash paid for manufacturing over head has been recorded) (f)   Completed 5,000 kilts (Approximately $51,000 of inventory remains in process Total Cost =$120000+45000+36000-51000 =150000 Cost of Each Helmet =$150000/5000=$30 Finished goods A/c $150000            To Work In Process A/c $150000 (being Finished goods has been terefered from Work in process) (g) Sold 4,500 kilts at $80.00 per unit. Cash A/c $135000        To Sales A/c (4500*$80) $135000 (Being Sales made has been recorded) (h) Disposed of any over- or under-applied overhead cost Under applied Over head cost =$42000-$36000 =$6000 Cost of goods Sold A/c $6000         To manufacturing overhead A/c $6000 (being under applied overhead cost has ben recorded)