The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Row materials purchased on account, $210,000. b. Raw materials used in production, $190,000 (S178,000 direct materials and $12,000 indirect materials). C. Accrued direct labor cost of $90,000 and indirect labor cost of $110,000. d. Depreciation recorded on factory equipment, $40,000. e. Other manufacturing overhead costs accrued during October, $70,000. 1. The company applies manufacturing overhesd cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October. g. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-acounts for Manufocturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in esch account, ossuming that Work in Process has a beginning balance of $42,000.
The Polaris Company uses a job-order costing system. The following transactions occurred in October: a. Row materials purchased on account, $210,000. b. Raw materials used in production, $190,000 (S178,000 direct materials and $12,000 indirect materials). C. Accrued direct labor cost of $90,000 and indirect labor cost of $110,000. d. Depreciation recorded on factory equipment, $40,000. e. Other manufacturing overhead costs accrued during October, $70,000. 1. The company applies manufacturing overhesd cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October. g. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. h. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost. Required: 1. Prepare journal entries to record the transactions given above. 2. Prepare T-acounts for Manufocturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in esch account, ossuming that Work in Process has a beginning balance of $42,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:### Educational Content: Job-Order Costing System Example
#### Overview
The Polaris Company uses a job-order costing system. Below are the recorded transactions for October:
a. Raw materials purchased on account: $210,000.
b. Raw materials used in production: $190,000 ($178,000 direct materials and $12,000 indirect materials).
c. Accrued direct labor cost of $90,000 and indirect labor cost of $110,000.
d. Depreciation recorded on factory equipment: $40,000.
e. Other manufacturing overhead costs incurred during October: $70,000.
f. The company supplied manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 30,000 machine-hours were used in October.
g. Jobs costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Jobs that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 25% above cost.
#### Required Tasks
1. Prepare journal entries to record the transactions listed 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 begins with a balance of $42,000.
#### Interactive Elements
**Journal Entry Worksheet**
- An editable worksheet is provided where users can input the required journal entries for each transaction.
- For example, transaction a (raw materials purchased on account) is recorded with a debit entry.
**Instructions**
- Users should ensure debits are recorded before credits.
- The worksheet allows for reviewing and clearing entries, as well as viewing the general journal.
This setup helps in illustrating how job-order costing works in a practical business scenario, enhancing comprehension of accounting practices related to product costing in a manufacturing context.
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