Fort Corporation had the folowing transactions during its first month of operati
ID: 2537533 • Letter: F
Question
Fort Corporation had the folowing transactions during its first month of operations: 1. Purchased raw materials on account, $85,000 2. Raw Materials of $30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,000 was classified as indirect 3. Factory labor costs incurred were $175,000 of which $145,000 pertained to factory wages payable and $30,000 pertained to employer payroll taxes payable. 4 Time tickets Indicated that $145,000 was direct labor and $30,000 was indirect labor 5, overhead costs incurred on account were $198,000. 6. Manufacturing overhead was applied at the rate of 150% of direct labor cost. 7. Goods costing $115,000 are still Incomplete at the end of the month; the other goods were completed and transferred to finished goods. 8. Finished goods costing $100,000 to manufacture were sold on account for $130,000. the above transactions for Fort Corporation. (Record journal entries in the order presented in the problem. Credit account titles are automaticali indented when the amount is entered. Do not indent manualy,) No. Account Titles and Explanation Debit Credit 2.Explanation / Answer
Note: Cost of goods completed:
Manufacturing cost incurred during the year:
Material: 24000
Labour: 145000
Overheads applied(145000*150%): 217500
Total cost incurred: 386500
Lless: Ending WIP: 115000
Cost of goods completed: 271500
S.NO. ACCOUNTS TITLES AND EXPLANATIONS DEBIT IN $ CREDIT IN $ 1 Raw material Inventory Dr. 85,000 Account payable 85,000 (For raw material purchased) 2 Work in process Inventory Dr. 24,000 Manufacturing overheads Account Dr. 6,000 Raw material Inventory Account 30,000 (for raw material issued as direct and indirect material) 3 Factory labour Dr. 175,000 Wages payable 145,000 Employer payroll tax payable 30000 (for wages incurred) 4 Work in Process Inventory Dr. 145,000 Manufacturing overheads Account Dr. 30,000 Factory Labour 175,000 (for wages charged to work in process and overheads Account) 5 Manufacturing overheads Account Dr. 198,000 Accounts payable 198,000 (For manufacturing overheads incurred for production) 6 Work in Process Inventory Dr. 217,500 Manufacturing overhead account 217,500 (For manufacturing overhead applied during the month) 7 Finished Goods Inventory 271,500 Work in Process Inventory 271,500 (For transferring completed goods to next process) 8 Cost of Goods sold account Dr. 100,000 Finished Goods Inventory Account 100,000 (for cost of goods sold transferred from finished goods) 8 Accounts receivable 130,000 Sales revenue 130,000 ( for good sold)