Concept explainers
Concept Introduction:
Job cost sheet is a document prepared by the company which is used to record the manufacturing cost to determine the total cost assigned to each product or each job.
To prepare:
To prepare job cost sheet for each job.
![Check Mark](/static/check-mark.png)
Answer to Problem 3BPSB
Particulars | Job No. 487 | Job No. 488 | Job No. 489 | Job No. 490 | Job No. 491 |
Materials | 30,000 | 20,000 | 12,000 | 14,000 | 4,000 |
Labor | 8,000 | 7,000 | 25,000 | 26,000 | 2,000 |
16,000 | 14,000 | 50,000 | 52,000 | 4,000 | |
Total cost | 54,000 | 41,000 | 87,000 | 92,000 | 10,000 |
Explanation of Solution
Given,
Materials-
- Job No. 487 - $30,000
- Job No. 488 - $20,000
- Job No. 489 - $12,000
- Job No, 490 - $14,000
- Job No. 491 - $4,000 Labor-
- Job No. 487 - $8,000
- Job No. 488 - $7,000
- Job No. 489 - $25,000
- Job No, 490 - $26,000
- Job No. 491 - $2,000 Overhead-
Total costs is calculated as follows-
Conclusion:
Thus, Job cost sheet is prepared for each job.
Concept Introduction:
Journal entries-
The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The debits and the credits are made on the basis of the rules of the accounting.
To prepare:
To prepare the journal entries entry.
![Check Mark](/static/check-mark.png)
Answer to Problem 3BPSB
Journal entries:
S. No. | Accounts titles and Explanation | Debit ($) | Credit ($) |
A. | Raw material inventory | 125,000 | |
Accounts payable | 125,000 | ||
(To record purchase of raw materials on account) | |||
B. | Work in process inventory | 80,000 | |
Raw material inventory | 80,000 | ||
(To assign raw material inventory to jobs) | |||
Factory overhead | 12,000 | ||
Raw material inventory | 12,000 | ||
(To assign costof indirect materials to job) | |||
C. | Factory overhead | 11,000 | |
Cash | 11,000 | ||
(To record expense for factory overhead) | |||
D. | Work in process inventory | 68,000 | |
Cash | 68,000 | ||
(To assign cost of direct labor to job) | |||
Factory overhead | 16,000 | ||
Cash | 16,000 | ||
(To assign cost of indirect labor to job) | |||
E. | Work in process inventory | 118,000 | |
Factory overhead | 118,000 | ||
(To apply overhead at 200% of direct labor of Job 487,489,490) | |||
F. | Finished goods inventory | 233,000 | |
Work in process inventory | 233,000 | ||
(To transfer work in process to finished goods) | |||
G. | 340,000 | ||
Sales revenue | 340,000 | ||
(To record the sales on account) | |||
Cost of goods sold | 141,000 | ||
Finished goods inventory | 141,000 | ||
(To record cost of goods sold) | |||
H. | Factory overhead | 96,000 | |
37,000 | |||
Accumulated depreciation on Equipment | 21,000 | ||
Prepaid insurance | 7,000 | ||
Property tax payable | 31,000 | ||
(To record other factory overhead) | |||
I. | Work in process inventory | 18,000 | |
Factory overhead | 18,000 | ||
(To apply overhead at 200% of direct labor of Job. 488,491) |
Explanation of Solution
Explanation for
- Raw material inventory is an asset and its balance increases, so it is debited. Accounts payable is a liability and its balance increases, so it is credited.
- Work in process is an asset and its balance increases, so it is debited. Raw material inventory is an asset and its balance decreases, so it is credited. Factory overhead is a cost and its balance increases so it is debited. Raw material inventory is an asset and its balance decreases, so it is credited.
- Factory overhead is a cost and its balance increases so it is debited. Cash is an asset and its balance decreases, so it is credited.
- Work in process is a current asset and its balance increases, so it is debited. Cash is paid, and it is an asset, its balance is decreasing, so it is credited. Factory overhead is a cost and its balance increases so it is debited. Cash is paid, and it is an asset, its balance is decreasing, so it is credited.
- Work in process is a current asset and its balance increases, so it is debited. Factory overhead is an expense and its balance decreases so it is credited.
- Finished goods is an asset and its balance increases, so it is debited. Work in process is a current asset and its balance decreases, so it is credited.
- Accounts receivable is an asset and its balance increases, so it is debited. Sales revenue is an income and its balance is increasing so it is credited. Finished goods are an asset and its balance decreases so it is credited. Cost of goods sold is an expense and its balance increases so it is debited.
- Factory overhead is a cost and its balance increases so it is debited. Accumulated
depreciation is a contra asset and its balance increases, so it is credited. Prepaid insurance is an asset and its balance decreases, so it is credited. Property tax payable is a liability and its balance increases, so it is credited. - Work in process is a current asset and its balance increases, so it is debited. Factory overhead is an expense and its balance decreases so it is credited.
Conclusion:
Thus, Journal entries are prepared.
Concept Introduction:
T-Account
T-Account is most common type of account. It is the simplest account which makes study of accounting very simple.
This accounts resembles with the English letter 'T'.
T-account has three parts-
To prepare:
To prepare T-Accounts and to determine their balances.
![Check Mark](/static/check-mark.png)
Answer to Problem 3BPSB
Set up T-accounts
Raw Material InventoryWork in process inventory Finished goods inventory
T-accounts-
Raw material Inventory | |||
Accounts payable | 125,000 | Work in process inventory | 80,000 |
Factory overhead | 12,000 | ||
Balance | 33,000 | ||
Work in process inventory | |||
Raw material Inventory | 80,000 | Finished goods inventory | 233,000 |
Factory wages payable | 68,000 | ||
Factory overhead | 118,000 | ||
Factory overhead | 18,000 | ||
Balance | 51,000 | ||
Finished goods inventory | |||
Work in process inventory | 233,000 | Cost of goods sold | 141,000 |
Balance | 92,000 | ||
Factory overhead | |||
Raw material Inventory | 12,000 | Work in process inventory | 118,000 |
Cash | 11,000 | Work in process inventory | 18,000 |
Factory wages payable | 16,000 | ||
Accumulated depreciation | 58,000 | ||
Prepaid insurance | 7,000 | ||
Property tax payable | 31,000 | ||
Balance | 1,000 | ||
Cost of goods sold | |||
Finished goods inventory | 141,000 | ||
Balance | 141,000 |
Explanation of Solution
The T-shaped accounts are balanced at regular intervals and the time period for balancing depends upon the practice of the organization, say daily, weekly and monthly. When balancing, usually we add all the line items on a particular side for both the sides and we will see which side has more amount. The side with more amount is said to be the balance side of the account and the difference between the amounts is said to be the balance of the account.
Conclusion:
Thus, T-accounts are prepared and their balances are determined.
Concept Introduction:
Cost of goods sold -
Cost of goods sold can be defined as the total cost assigned to the goods that are sold during a period of time. It is calculated by summing up all the costs incurred starting from purchases till the process of manufacturing.
To Report:
To report the total cost of each job.
![Check Mark](/static/check-mark.png)
Answer to Problem 3BPSB
Work in process inventory | |
Job 488 | 41,000 |
Job 491 | 10,000 |
Total work in process | 51,000 |
Finished goods | |
Job 490 | 92,000 |
Cost of goods sold | |
Job 487 | 54,000 |
Job 489 | 87,000 |
Total | 141,000 |
Explanation of Solution
Finished goods = Job 490 = $92,000
Conclusion:
Thus, cost of each jobs are reported.
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Chapter 19 Solutions
FUNDAMENTAL ACCT PRIN CONNECT ACCESS
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