Chapter 19, Problem 1GLP

The General Ledger tool in Connect automates several of the procedural steps in accounting so that the financial professional can focus on the impacts of each transaction on various reports and performance measures.

GL19-1 General Ledger assignment GL19-1, based on Problem 19- lA, focuses on transactions related to job order costing. Prepare summary journal entries to record the cost of jobs and their flow through the manufacturing environment. Then prepare a schedule of cost of goods manufactured and a partial income statement. Problem 19-1A
Production costs computed and recorded; reports prepared C2 P1 P2 P3 P4
Marcelino Co.'s March 31 inventory of raw materials is $80,000. Raw materials purchases in April are $500,000, and factory payroll cost in April is $363,000. Overhead costs incurred in April are: indirect materials, $50,000; indirect labor, $23,000; factory rent, $32,000; factory utilities, $19,000; and factory equipment depreciation, $51,000. The predetermined overhead rate is 50% of direct labor cost. Job 306 is sold for $635,000 cash in April, Costs of the three jobs worked on in April Mow.

r	Job 306	Job 307	Job 308
Balances on March 31
Direct materials.........	... $ 29.000	$35.000
Direct labor.........	20,000	18.000
Applied overhead........	10,000	9.000
Costs during April
Direct materials	135,000	22010	$100,000
Direct labor.........	85,000	150,000	105,000
Applied overhead............	?	?	?
Status on Apr! 30...........	Finished (scldl)	Finished (unsold)	In process

Required

1. Determine the total of each production cost incurred for April (direct labor, direct materials, and applied overhead) and the total cost assigned to each job (including the balances from March 31).
2. Prepare journal entries for the month of April to record the following.

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

Prepare a schedule of cost of goods manufactured.

Compute gross profit for April. Show how to present the inventories on the April 30 balance sheet.

5. The over- or underapplied overhead is closed to Cost of Goods Sold, Discuss how this adjustment impacts business decision malting regarding individual jobs or batches of jobs.