Problem 5.26 ournal Entries, T-Accounts, Cost of Goods Manufactured and Sold Dur
ID: 2557859 • Letter: P
Question
Problem 5.26 ournal Entries, T-Accounts, Cost of Goods Manufactured and Sold During May, the following transactions were completed and reported by Jerico Compamy: a. Materials purchased on account, $60,100. b. Materials issued to preduction to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,800. c. Payroll for the month: direct labor, S75,000; indirect labor, $36,000; administrative, S28,000; sales, $19,000. d. Depreciation on factory plant and equipment, $10,400. e. Property taxes on the factory accrued during the month, $1,450. f Insurance on the factory expired with a credit to the prepaid insurance account, $6,200 g. Factory ubilities, $5,500. h. Advertising paid with cash, $7,900. i. Depreciation on office equipment, $800; on sales vehicles, $1,650 J. Legal fees incurred but not yet paid for preparation of lease agreements, $730 k. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month L. Cost of jobs completed during the month, $160,000. The company also reported the folloning beginning balances in its inventory accounts: Materials Inventory s 7,500 37,000 Work-in-Process Inventory Finished Goods Iaventory 50,000 Web Sice Gelery ?? Syndoub @penon ? occo-oco ocoweomr mocco econen tu o wear tt Arm.h ndsnes I Type here to searchExplanation / Answer
Journal entries:
Date
Description
Debit ($)
Credit ($)
Purchases
60100
accounts payable
60100
(Being materials purchased on credit)
Cost of production
58800
Inventory -materials
50000
Indirect materials
8800
(Being materials issued to production)
Direct labour -Wages
75000
Indirect labour -wages
36000
Administrative labour -Slaries
28000
Sales labour -Salaries
19000
Bank
158000
(Being wages and salaries paid)
Depreciation
10400
Factory plant and equipment
10400
(Being depreciation charged on factory plant)
Property taxes
1450
Property taxes payable
1450
(Being property taxes payable)
Insurance premium
6200
Prepaid insurance premium
6200
(Being insurance premium adjusted against prepaid insurance premium)
Utilities
5500
Bank
5500
(Being factory utilities purcahsed and used)
Advertisment expenses
7900
Bank
7900
(Being advertisement expenses paid)
Depreciation
2450
Office equipment
800
Sales vehicle
1650
(Being depeciation chanrged)
Lease agreement expenses
750
Lease agreement expenses payable
750
(Being legal expenses payable)
Variable overhead
72000
Bank
72000
(Being variable overhead incurred and paid)
Cost of production
72000
Variable overhead
72000
(Being variable overhead charged to cost of production)
Job cost
160000
Bank
160000
(Being job cost incurred and paid)
Requirement 2:
Purchases
Accounts payable
60100
Cost of production
Inventory -materials
50000
Indirect materials
8800
Direct labour -Wages
Bank
75000
Indirect labour -wages
Bank
36000
Administrative labour -Salaries
Bank
28000
Sales labour -Salaries
Bank
19000
Accounts payable
Purchases
60100
Inventory -materials
Cost of production
50000
Factory plant and equipment
Depreciation
10400
Property taxes
Property taxes payable
1450
Insurance premium
Prepaid insurance premium
6200
Utilities
Bank
5500
Office equipment
Depreciation
800
Lease agreement expenses
Lease agreement expenses payable
750
Variable overhead
Bank
72000
Cost of production
72000
Job cost
Bank
160000
Property taxes payable
Property taxes
1450
Prepaid insurance premium
Insurance premium
6200
Advertisement expenses
Bank
7900
Sales vehicle
Depreciation
1650
Lease agreement expenses payable
Lease agreement expenses
750
Cost of goods manufactured
Opening inventory -materials
7500
Add: Materials issued to production
50000
Indirect materials
8800
58800
Direct labour
75000
Indirect labour
36000
111000
Depreciation on factory plant and equipment
10400
Factory tax
1450
Insurance premium for the factory
6200
Factory utilities
5500
Variable overhead
72000
272850
Add: Opening work in process inventory
37000
Cost of goods manufactured
309850
Cost of goods sold
Opening inventory -materials
7500
Add: Materials issued to production
50000
Indirect materials
8800
58800
Direct labour
75000
Indirect labour
36000
Administrative
28000
Sales
19000
158000
Depreciation on factory plant and equipment
10400
Factory tax
1450
Insurance premium for the factory
6200
Factory utilities
5500
Advertisement
7900
Variable overhead
72000
Depreciation on office equipment
800
Depreciation on sales vehicles
1650
330200
Add: Opening work in process inventory
37000
Cost of goods manufactured
367200
Less: Closing stock of finished goods
50000
Cost of goods sold
317200
Journal entries:
Date
Description
Debit ($)
Credit ($)
Purchases
60100
accounts payable
60100
(Being materials purchased on credit)
Cost of production
58800
Inventory -materials
50000
Indirect materials
8800
(Being materials issued to production)
Direct labour -Wages
75000
Indirect labour -wages
36000
Administrative labour -Slaries
28000
Sales labour -Salaries
19000
Bank
158000
(Being wages and salaries paid)
Depreciation
10400
Factory plant and equipment
10400
(Being depreciation charged on factory plant)
Property taxes
1450
Property taxes payable
1450
(Being property taxes payable)
Insurance premium
6200
Prepaid insurance premium
6200
(Being insurance premium adjusted against prepaid insurance premium)
Utilities
5500
Bank
5500
(Being factory utilities purcahsed and used)
Advertisment expenses
7900
Bank
7900
(Being advertisement expenses paid)
Depreciation
2450
Office equipment
800
Sales vehicle
1650
(Being depeciation chanrged)
Lease agreement expenses
750
Lease agreement expenses payable
750
(Being legal expenses payable)
Variable overhead
72000
Bank
72000
(Being variable overhead incurred and paid)
Cost of production
72000
Variable overhead
72000
(Being variable overhead charged to cost of production)
Job cost
160000
Bank
160000
(Being job cost incurred and paid)