Marcelino Co.'s March 31 inventory of raw materials is $89,000. Raw materials purchases in April are $510,000, and factory payroll cost in April is $378,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $22,000; factory rent, $34,000; factory utilities, $19,000; and factory equipment depreciation, $52,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $690,000 cash in April. Costs of the three jobs worked on in April follow. Job 306 Job 307 Job 308 Balances on March 31 Direct materials $ 28,000 $ 41,000 Direct labor 24,000 13,000 Applied overhead 12,000 6,500 Costs during April Direct materials 131,000 215,000 $ 110,000 Direct labor 102,000 154,000 100,000 Applied overhead ? ? ? Status on April 30 Finished (sold) Finished (unsold) In process Materials purchases (on credit). Direct materials used in production. Direct labor paid and assigned to Work in Process Inventory. Indirect labor paid and assigned to Factory Overhead. Overhead costs applied to Work in Process Inventory. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) Transfer of Jobs 306 and 307 to Finished Goods Inventory. Cost of goods sold for Job 306. Revenue from the sale of Job 306. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.) 2. Prepare journal entries for the month of April to record the above transactions.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Marcelino Co.'s March 31 inventory of raw materials is $89,000. Raw materials purchases in April are $510,000, and factory payroll cost in April is $378,000. Overhead costs incurred in April are: indirect materials, $60,000; indirect labor, $22,000; factory rent, $34,000; factory utilities, $19,000; and factory equipment depreciation, $52,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $690,000 cash in April. Costs of the three jobs worked on in April follow.

	Job 306	Job 307	Job 308
Balances on March 31
Direct materials		$	28,000		$	41,000
Direct labor			24,000			13,000
Applied overhead			12,000			6,500
Costs during April
Direct materials			131,000			215,000	$	110,000
Direct labor			102,000			154,000		100,000
Applied overhead			?			?		?
Status on April 30	Finished (sold)	Finished (unsold)		In process

Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 306 and 307 to Finished Goods Inventory.
Cost of goods sold for Job 306.
Revenue from the sale of Job 306.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)

2. Prepare journal entries for the month of April to record the above transactions.

Answer is complete but not entirely correct.
No
Transaction
General Journal
Debit
Credit
1
Raw materials inventory
510,000 O
Accounts payable
510,000
b.
Work in process inventory
456.000
Raw materials inventory
456.000
3
Work in process inventory
356.000 O
C.
Factory overhead
356,000
Factory overhead
Accounts payable
4
d.
22,000 O
22,000
5
Work in process inventory
52.000 0
e.
Factory overhead
52,000 0
f(1).
Factory overhead
60.000
Raw materials inventory
60,000
7
f(2).
Factory overhead
34,000 8
Cash
34,000 X
f(3).
Factory overhead
52,000
Accumulated depreciation-factory equipment
52.000
f(4).
Factory overhead
19,000 X
Cash
19.000
10
Finished goods inventory
854,500 O
Work in process inventory
854.500
11
h.
Cost of goods sold
348.000
Finished goods inventory
348.000 O
12
i.
Cash
690,000 O
Sales
690.000
13
Cost of goods sold
9.000
Factory overhead
9.000

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