Problem 7-65 (Algo) Tracing Costs in a Job Company (LO 7-2, 3) Edwin Parts, a job shop, recorded the following transactions in May. 1. Purchased $87,460 in materials on account. 2. Issued $3,780 in supplies from the materials inventory to the production department. 3. Issued $43,860 in direct materials to the production department. 4. Paid for the materials purchased in transaction (1). 5. Incurred wage costs of $68,240, which were debited to Payroll, a temporary account. Of this amount, $22,560 was withheld for payroll taxes and credited to Payroll Taxes Payable. The remaining $45,160 was paid in cash to the employees. See transactions (6) and (7) for additional information about Payroll. 6. Recognized $34,960 in fringe benefit costs, incurred as a result of the wages paid in (5). This $34,960 was debited to Payroll and credited to Fringe Benefits Payable. 7. Analyzed the Payroll account and determined that 65 percent represented direct labor; 15 percent, Indirect manufacturing labor, and 20 percent, administrative and marketing costs. 8. Applied overhead on the basis of 140 percent of direct labor costs. 9. Paid for utilities, power, equipment maintenance, and other miscellaneous Items for the manufacturing plant totaling $41,560. 10. Recognized depreciation of $26,560 on manufacturing property, plant, and equipment. Required: a. Prepare journal entries to record these transactions. b. The balances that appeared in the accounts of Edwin Parts are shown as follows. Beginning $ 90,160 Ending 25,660 102,860 2 2 Materials Inventory Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold Prepare T-accounts to show the flow of costs during the period. $ 93,460 157,400
Problem 7-65 (Algo) Tracing Costs in a Job Company (LO 7-2, 3) Edwin Parts, a job shop, recorded the following transactions in May. 1. Purchased $87,460 in materials on account. 2. Issued $3,780 in supplies from the materials inventory to the production department. 3. Issued $43,860 in direct materials to the production department. 4. Paid for the materials purchased in transaction (1). 5. Incurred wage costs of $68,240, which were debited to Payroll, a temporary account. Of this amount, $22,560 was withheld for payroll taxes and credited to Payroll Taxes Payable. The remaining $45,160 was paid in cash to the employees. See transactions (6) and (7) for additional information about Payroll. 6. Recognized $34,960 in fringe benefit costs, incurred as a result of the wages paid in (5). This $34,960 was debited to Payroll and credited to Fringe Benefits Payable. 7. Analyzed the Payroll account and determined that 65 percent represented direct labor; 15 percent, Indirect manufacturing labor, and 20 percent, administrative and marketing costs. 8. Applied overhead on the basis of 140 percent of direct labor costs. 9. Paid for utilities, power, equipment maintenance, and other miscellaneous Items for the manufacturing plant totaling $41,560. 10. Recognized depreciation of $26,560 on manufacturing property, plant, and equipment. Required: a. Prepare journal entries to record these transactions. b. The balances that appeared in the accounts of Edwin Parts are shown as follows. Beginning $ 90,160 Ending 25,660 102,860 2 2 Materials Inventory Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold Prepare T-accounts to show the flow of costs during the period. $ 93,460 157,400
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter26: Manufacturing Accounting: The Job Order Cost System
Section: Chapter Questions
Problem 6SEA: JOURNAL ENTRIES FOR MATERIAL, LABOR, OVERHEAD, AND SALES Micro Enterprises had the following job...
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Transcribed Image Text:Problem 7-65 (Algo) Tracing Costs in a Job Company (LO 7-2, 3)
Edwin Parts, a job shop, recorded the following transactions in May.
1. Purchased $87,460 in materials on account.
2. Issued $3,780 in supplies from the materials inventory to the production department.
3. Issued $43,860 in direct materials to the production department.
4. Paid for the materials purchased in transaction (1).
5. Incurred wage costs of $68,240, which were debited to Payroll, a temporary account. Of this amount, $22,560 was withheld for
payroll taxes and credited to Payroll Taxes Payable. The remaining $45,160 was paid in cash to the employees. See transactions (6)
and (7) for additional information about Payroll.
6. Recognized $34,960 in fringe benefit costs, incurred as a result of the wages paid in (5). This $34,960 was debited to Payroll and
credited to Fringe Benefits Payable.
7. Analyzed the Payroll account and determined that 65 percent represented direct labor; 15 percent, indirect manufacturing labor;
and 20 percent, administrative and marketing costs.
8. Applied overhead on the basis of 140 percent of direct labor costs.
9. Paid for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant totaling $41,560.
10. Recognized depreciation of $26,560 on manufacturing property, plant, and equipment.
Required:
a. Prepare journal entries to record these transactions.
b. The balances that appeared in the accounts of Edwin Parts are shown as follows.
Beginning
$ 90,160
Ending
Materials Inventory
Work-in-Process Inventory.
Finished Goods Inventory
Cost of Goods Sold
Prepare T-accounts to show the flow of costs during the period.
25,660
102,860
2
$ 93,460
157,400
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