Prima Company is using job order cost accounting system for some time. Assume that on December 1, these balances appear in the following accounts: Materials 100,000 Work in Process 80,000 Finished Goods 60,000 These are the transactions of Prima Company together with the journal cntrics. A. Raw Materials Purchases for the month of Dec amounting to P 100,000. B. Raw Materials are allocated as follows: Direct Materials 78,000; Indirect Materials P12,000 C. During the month, wages and salaries totaling P 150,000 were earned by the factory employees, details as foilows : Deduction to Factory Payroll as follows: due to BIR P3,000; due to SSS P1,000; due to HDMF (Pag-ibig) P1000 & due to PHIC P500. D. Factory Labor was allocated as follows Direct Labor P100,000; Indirect Labor P50,000 E. Other overhead costs, such as utilities, insurance, and depreciation, totaling P50,000 were incurred (not yet paid) during the month and computed Depreciation for Factory Equipments totaled to P10,000. It is estimated that 80% of the direct labor cost is chargeable to jobs worked on during the month of December. An estimate of overhead applicable to each job is estimated because it is impossible to determine the exact amount applicable at this point of the process. F. During the month, P250,000 worth of cost of jobs were completed. G. Merchandise totaled P280,000 were sold to various customers. Requirement: 1. Prepare the Journal Entries 2. Post the journal entries to its Ledger Accounts (T-Accounts)
Prima Company is using job order cost accounting system for some time. Assume that on December 1, these balances appear in the following accounts: Materials 100,000 Work in Process 80,000 Finished Goods 60,000 These are the transactions of Prima Company together with the journal cntrics. A. Raw Materials Purchases for the month of Dec amounting to P 100,000. B. Raw Materials are allocated as follows: Direct Materials 78,000; Indirect Materials P12,000 C. During the month, wages and salaries totaling P 150,000 were earned by the factory employees, details as foilows : Deduction to Factory Payroll as follows: due to BIR P3,000; due to SSS P1,000; due to HDMF (Pag-ibig) P1000 & due to PHIC P500. D. Factory Labor was allocated as follows Direct Labor P100,000; Indirect Labor P50,000 E. Other overhead costs, such as utilities, insurance, and depreciation, totaling P50,000 were incurred (not yet paid) during the month and computed Depreciation for Factory Equipments totaled to P10,000. It is estimated that 80% of the direct labor cost is chargeable to jobs worked on during the month of December. An estimate of overhead applicable to each job is estimated because it is impossible to determine the exact amount applicable at this point of the process. F. During the month, P250,000 worth of cost of jobs were completed. G. Merchandise totaled P280,000 were sold to various customers. Requirement: 1. Prepare the Journal Entries 2. Post the journal entries to its Ledger Accounts (T-Accounts)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Prima Company is using job order cost accounting system for some time. Assume that on December 1, these
balances appear in the following accounts:
Materials
100,000
Work in Process
80,000
Finished Goods
60,000
These are the transactions of Prima Company together with the journal cntrics.
A. Raw Materials Purchases for the month of Dec amounting to P 100,000.
B. Raw Materials are allocated as follows:
Direct Materials 78,000; Indirect Materials P12,000
C. During the month, wages and salaries totaling P 150,000 were earned by the factory employees, details as
foilows : Deduction to Factory Payroll as follows: due to BiR P3,000; due to SSS P1,000; due to HDMF
(Pag-ibig) P1000 & due to PHIC P500.
D. Factory Labor was allocated as follows Direct Labor P100,000; Indirect Labor P50,000
E. Other overhead costs, such as utilities, insurance, and depreciation, totaling P50,000 were incurred (not yet
paid) during the month and computed Depreciation for Factory Equipments totaled to P10,000.
It is estimated that 80% of the direct labor cost is chargeable to jobs worked on during the month of December. An
estimate of overhead applicable to each job is estimated because it is impossible to determine the exact amount
applicable at this point of the process.
F. During the month, P250,000 worth of cost of jobs were completed.
G. Merchandise totaled P280,000 were sold to various customers.
Requirement:
1. Prepare the Journal Entries
2. Post the journal entries to its Ledger Accounts (T-Accounts)
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