Journal entries to correct defective work. Columbus Fabricators manufacture golf carts and other recreational equipment. One order from Wisconsin Wholesale Company for 1000 carts showed the following costs per unit: direct materials, $40, direct labor, $20, and factory overhead applied at 140% of direct labor cost if defective work is charged to a specific job and 150% if it is not. Final inspection revealed that wheels were assembled with improper bearings. The wheels were disassembled and the proper bearings inserted. The cost of correcting each defective cart consists of $2 added cost for bearings, $4 for labor, and factory overhead at the predetermined rate. Required: Prepare journal entries to record correction of the defective units and transfer of the work in process to finished goods if: (1) The Wisconsin Wholesale Company order is to be charged with the cost of defective units. (2) The cost of correcting the defective work is not charged to Wisconsin Wholesale Company order.
Final inspection revealed that wheels were assembled with improper bearings. The wheels were disassembled and the proper bearings inserted. The cost of correcting each defective cart consists of $2 added cost for bearings, $4 for labor, and factory overhead at the predetermined rate.
Required: Prepare journal entries to record correction of the defective units and transfer of the work in process to finished goods if:
(1) The Wisconsin Wholesale Company order is to be charged with the cost of defective units.
(2) The cost of correcting the defective work is not charged to Wisconsin Wholesale Company order.
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