P34A Job Cost Journal Entries Prior to the beginning of 2016

P3-4A. Job Cost Journal Entries Prior to the beginning of 2016. Lowe Company estimated that i cur $176,000 of manufacturing overhead cost during 2016, using 16,000 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 $28,000, $-0-, and $43,000, respectively. Required Prepare general journal entries to record the following for 2016 a. Purchased materials on account, $39,000 b. Of the total dollar value of materials used, $31,000 represented direct material and $11,000 indi- rect material. c. Determined total factory labor, $135,000 (15,000 hrs. @$9/hr.). Of the factory labor, 80% was direct and 20% indirect. e. Applied manufacturing overhead based on direct labor hours to work in process. f. Determined actual manufacturing overhead other than those items already recorded, $92,000. (Credit Accounts Payable.) Ending inventories of work in process and finished goods were $32,000 and $57,000, respec- tively. Determine the cost of finished goods (credit WIP) and the cost of goods sold (credit FG inventory). Make separate entries. Transferred the balance in Manufacturing Overhead to Cost of Goods Sold g. h.

Solution

Journal entry :

Date	accounts & explanation	debit	credit
	Raw material a/c	39000
	Account payable a/c		39000
	(To record raw material purchase)
	Work in process a/c	31000
	Manufacturing overhead a/c	11000
	Raw material a/c		42000
	(To record material transferred)
	Work in process (135000*80%)	108000
	Manufacturing overhead a/c (135000*20%)	27000
	Wages payable a/c		135000
	(To record wages)
	Work in process a/c	165000
	Manufacturing overhead a/c		165000
	(To record overhead applied)
	Manufacturing overhead	92000
	Account payable a/c		92000
	(To record actual manufacturing overhead)
	Finished goods inventory a/c	272000
	Work in process a/c		272000
	(To record cost of finished goods)
	Cost of goods sold a/c	258000
	Finished goods inventory		258000
	(To record cost of goods sold)
	Manufacturing overhead a/c	35000
	Cost of goods sold a/c		35000
	(To record over applied overhead)