The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.

The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.

Required:

1. Prepare journal entries to record the information given above.

  • a. Raw materials purchased on account, $210,000.

Debit raw materials inventory $210,000 and Credit accounts payable $210,000.

  • b. Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials).

Debit Work in process inventory $178,000 and debit manufacturing overhead $12,000.  Credit Raw materials inventory $190,000.

  • c. Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.

Debit work in process inventory $90,000 and debit manufacturing overhead $110,000.  Credit Salaries and wages payable $200,000.

  • d. Depreciation recorded on factory equipment, $40,000.

Debit manufacturing overhead $40,000 and credit accumulated depreciation $40,000.

  • e. Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable).

Debit manufacturing overhead $70,000 and credit accounts payable $70,000.

  • f. The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.

Debit work in process inventory $240,000 and credit manufacturing overhead $240,000.

  • g. Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

Debit finished goods $520,000 and credit work in process inventory $520,000.

  • h. Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.

Debit cost of goods sold $480,000 and credit finished goods $480,000.

2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $42,000.

 

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