To determine Prepare the journal entries to record summarizes each of these transactions in the company’s general ledger accounts. Explanation a. Prepare the journal entry to record purchase of direct materials during the month amount of $100,000 on account. Account titles and Explanation Debit Credit Materials inventory $100,000 Accounts payable $100,000 (To record purchases of direct materials during July) Table (1) Material inventory is a current asset, and it is increased. Therefore, debit material inventory account for $100,000. Accounts payable is a current liability, and it is increased. Therefore, credit accounts payable account for $100,000. b. Prepare the journal entry to record issue of material requisition by the production department during the month. Account titles and Explanation Debit Credit Work in process inventory $98,000 Materials inventory $98,000 (To record material requisition issued by production department) Table (2) Work in process inventory is a current asset and it is increased. Therefore, debit work in process inventory account for $98,000. Material inventory is a current asset, and it is decreased. Therefore, credit material inventory account for $98,000. c. Prepare the journal entry to record time cards of direct workers show 1,800 hours worked on various jobs during the month. Account titles and Explanation Debit Credit Work in process inventory $54,000 Direct labor $54,000 (To record direct labor costs applicable to production in July) Table (3) Work in process inventory is a current asset, and it is increased. Therefore, debit work in process inventory account for $54,000. Direct labor is a current asset, and it is decreased. Therefore, credit direct labor account for $54,000. d. Prepare the journal entry to record direct workers were paid $50,000 in July. Account titles and Explanation Debit Credit Direct labor $50,000 Cash $50,000 (To record direct labor payroll paid in July) Table (4) Direct labor is a current asset, and it is increased. Therefore, debit direct labor account for $50,000. Cash is a current asset, and it is decreased. Therefore, credit cash account for $50,000. e. Prepare the journal entry to record actual overhead costs for the month amount to $110,000. Account titles and Explanation Debit Credit Manufacturing overhead $110,000 Accounts payable $110,000 (To record actual overhead costs in July) Table (5) Manufacturing overhead is a component of stockholders’ equity , and it is decreased. Therefore, debit manufacturing overhead account for $110,000. Accounts payable is a current liability, and it is increased...

17th Edition

ISBN: 9780078025778

Author: Jan Williams, Susan Haka, Mark S Bettner, Joseph V Carcello

Publisher: McGraw-Hill Education

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Chapter 17, Problem 2BP

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Prepare the journal entries to record summarizes each of these transactions in the company’s general ledger accounts.

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