EXERCISE 3–11 Journal Entries and T-Accounts [LO2, LO4, LO5]

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

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

b.       Raw materials issued to production, $190,000 (80% direct and 20% indirect).

c.       Direct labor cost incurred, $49,000; and indirect labor cost incurred, $21,000.

d.       Depreciation recorded on factory equipment, $105,000.

e.       Other manufacturing overhead costs incurred during October, $130,000 (credit Accounts Payable).

f.       The company applies manufacturing overhead cost to production on the basis of $4 per machine-hour. A total of 75,000 machine-hours were recorded for October.

g.        Production orders costing $510,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

h.       Production orders that had cost $450,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 50% above cost.

 

 

Required:

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

2.       Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant infor- mation above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35,000.