Chapter 2, Problem 8P

1.

To determine

Journalize the given material transactions.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

T-account: The condensed form of a ledger is referred to as T-account. The left-hand side of this account is known as debit, and the right hand side is known as credit.

Journalize the given material transactions.

S.no	Description	Post Ref	Debit ($)	Credit($)
a.	Materials		58,000
	Accounts payable			58,000
	(To record material purchase)
b.	Work-in-process		45,000
	Factory overhead		8,000
	Materials			53,000
	(To record direct material requisitioned to production)
c.	Materials		900
	Work-in process			900
	(To record direct materials returned to storeroom)
d.	Accounts payable		1,500
	Materials			1,500
	(To record materials returned to vendor)
e	Accounts payable		51,500
	Cash			51,500
	(To record payment made to vendor)

Table (1)

Description:

a.

• Material is an asset account and it is increased. Therefore, debit the materials account.
• Accounts payable is a liability account and it is increased. Therefore, credit the accounts payable account.

b.

• Work-in-process is an asset account and it is increased. Therefore, debit the work-in-process account.
• Factory overhead is an expense account and it is increased. Therefore, debit the factory overhead account.
• Material is an asset account and it is decreased. Therefore, credit the materials account.

c.

• Material is an asset account and it is increased. Therefore, debit the materials account.
• Work-in-process is an asset account and it is decreased. Therefore, credit the work-in-process account.

d.

• Accounts payable is a liability account and it is decreased. Therefore, debit the accounts payable account.
• Material is an asset account and it is decreased. Therefore, credit the material account

e.

• Accounts payable is a liability account and it is decreased. Therefore, debit the accounts payable account.
• Cash is an asset account and it is decreased. Therefore, credit the material account

2.

To determine

Post journal entries to     T- accounts.

Explanation of Solution

Prepare T-account for Cash.

Cash
Date	Particulars	Post Ref.	Debit ($)	Date	Particulars	Post Ref.	Credit($)
	Balance		64,250		(e)		51,500
					Balance c/d		12,750
			64,250				64,250

Table (2)

Prepare T-account for materials.

Materials
Date	Particulars	Post Ref.	Debit ($)	Date	Particulars	Post Ref.	Credit($)
	Balance		23,500		(b)		53,000
	(a)		58,000		(d)		1,500
	(c)		900		Balance c/d		27,900
			82,400				82,400

Table (3)

Prepare T-account for accounts payable.

Accounts payable
Date	Particulars	Post Ref.	Debit ($)	Date	Particulars	Post Ref.	Credit($)
	(d)		1,500		Balance		29,000
	(e)		51,500		(a)		58,000
	Balance c/d		34,000
			87,000				87,000

Table (4)

Prepare T-account for Factory overhead.

Factory overhead
Date	Particulars	Post Ref.	Debit ($)	Date	Particulars	Post Ref.	Credit($)
	(b)		8,000

Table (5)

Prepare T-account for work in process.

Work in process
Date	Particulars	Post Ref.	Debit ($)	Date	Particulars	Post Ref.	Credit($)
	Balance		31,000		(c)		900
	(b)		45,000		Balance c/d		75,100
			76,000				76,000

Table (6)

3a.

To determine

Report the cash balance as on September 30.

Explanation of Solution

Cash balance during September 30 is $12,750.

3b.

To determine

Report the material balance as on September 30.

Explanation of Solution

Material balance during September 30 is $27,900.

3c.

To determine

Report the accounts payable balance as on September 30.

Explanation of Solution

Accounts payable balance during September 30 is $34,000.