Question

exercise 3-5 (algo) journal entries and t-accounts lo3-1, lo3-2

the polaris company uses a job-order costing system. the following transactions occurred in october:

a. raw materials purchased on account, $211,000.
b. raw materials used in production, $188,000 ($150,400 direct materials and $37,600 indirect materials).
c. accrued direct labor cost of $49,000 and indirect labor cost of $21,000.
d. depreciation recorded on factory equipment, $106,000.
e. other manufacturing overhead costs accrued during october, $130,000.
f. the company applies manufacturing overhead cost to production using a predetermined rate of $7 per machine-hour. a total of 76,500 machine-hours were used in october.
g. jobs costing $513,000 were completed and transferred to finished goods.
h. jobs costing $449,000 were shipped to customers. these jobs were sold on account at 36% above cost.

required:

1. prepare journal entries to record the transactions given above.
2. prepare t-accounts for manufacturing overhead and work in process. post the relevant transactions from above to each account. compute the ending balance in each account, assuming work in process has a beginning balance of $36,000.

Explanation:

Post transactions to Manufacturing Overhead

Using the Manufacturing Overhead T-Account knowledge point

$$
LATEXBLOCK0
$$

Post transactions to Work in Process

Using the Work in Process T-Account knowledge point

$$
LATEXBLOCK1
$$

Answer:

Manufacturing Overhead T-Account

Debit		Credit
b.	\$37,600
c.	\$21,000
d.	\$106,000
e.	\$130,000
		f.	\$535,500
		Ending balance	\$240,900

---

Work in Process T-Account

Debit		Credit
b.	\$150,400
c.	\$49,000
f.	\$535,500
		g.	\$513,000
Ending balance	\$257,900