EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL
EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL
23rd Edition
ISBN: 9780357421123
Author: HEINTZ
Publisher: Cengage Learning
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Chapter 26, Problem 10SPA

JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORY OVERHEAD M Evans & Sons manufactures parts for radios. For each job order, it maintains ledger sheets on which it records direct labor, direct materials, and factory overhead applied. The factory overhead control account contains postings of actual overhead costs. At the end of the month, the under- or overapplied factory overhead is charged to the cost of goods sold account.

Factory overhead is applied on the basis of direct labor hours. For Job Nos. 101, 102, 103, and 104, direct labor hours are 12,000, 10,000, 11,000, and 18,000, respectively. The overhead application rate is $1.20/direct labor hour

  1. (a) Purchased raw materials on account, $50,000.
  2. (b) Issued direct materials:

Chapter 26, Problem 10SPA, JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORY OVERHEAD M Evans  Sons manufactures parts for , example  1

  1. (c) Issued indirect materials to production, $8,000.
  2. (d) Incurred direct labor costs:

Chapter 26, Problem 10SPA, JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED FACTORY OVERHEAD M Evans  Sons manufactures parts for , example  2

  1. (e) Charged indirect labor to production, $15,000.
  2. (f) Paid electricity bill, taxes, and repair fees for the factory and charged to production, $8,000.
  3. (g) Depreciation expense on factory equipment, $30,000.
  4. (h) Applied factory overhead to Job Nos. 101-104 using the predetermined factory overhead rare (see above).
  5. (i) Finished Job Nos. 101-103 and transferred to the finished goods inventory account as products N, O, and P.
  6. (j) Sold products N and O for $50,000 and $45,400, respectively.
  7. (k) Transferred under- or overapplied factory overhead balance to the cost of goods sold account.

REQUIRED

  1. 1. Prepare general journal entries to record transactions (a) through (k). Make compound entries for (b), (d), and (h), with separate debits for each job.
  2. 2. Post the entries to the work in process and finished goods T accounts only and determine the ending balances in these accounts.
  3. 3. Compute the balance in the job cost ledger and verify that this balance agrees with that in the work in process control account.

1.

Expert Solution
Check Mark
To determine

Prepare general journal entries to record transactions (a) through (k) and make compound entries for (b), (d), and (h), with separate debits for each job.

Explanation of Solution

Job order costing:

Job order costing is one of the methods of cost accounting under which cost is collected and gathered for each job, work order, or project separately. It is a system by which a factory maintains a separate record of each particular quantity of product that passes through the factory. Job order costing is used when the products produced are significantly different from each other.

Prepare journal entry to record the given transactions.

DateAccounts title and explanation

Debit

($)

Credit

($)

a.Material 50,000 
      Accounts payable 50,000
 (To record the purchase of materials on account.)  
    
b.Work in process10,000 
 Work in process8,000 
 Work in process9,000 
 Work in process15,000 
      Materials  42,000
 (To record issuance of  direct materials for the job: job no.101,102,103,104)  
    
c.Factory overhead8,000 
      Materials  8,000
 (To record the issuance of  indirect materials)  
    
d.Work in process22,000 
 Work in process19,000 
 Work in process20,500 
 Work in process30,000 
      Wages payable 91,500
 (To record direct labor incurred for the job: job no.101,102,103,104)  
    
e.Factory overhead15,000 
      Wages payable 15,000
 (To record the indirect labor charged to production)  
    
f.Factory overhead8,000 
      Cash 8,000
 (To record the payment of electricity bill, heating  oil, and repairs bills for the factory and charge made to production)  
    
g.Factory overhead30,000 
      Accumulated depreciation 30,000
 (To record the depreciation expense on factory equipment)  
    
h.Work in process [$12,000×$1.20]14,400 
 Work in process [$10,000×$1.20]12,000 
 Work in process [$11,000×$1.20]13,200 
 Work in process [$18,000×$1.20]21,600 
      Factory  overhead 61,200
 (To record  applied factory overhead to the job: job no.101,102,103,104)  
    
i.Finished goods (Product N) [$10,000+$22,000+$14,400]46,400 
      Work in process 46,400
 (To record the transfer of Job no. 101 to  Product N)  
    
 Finished goods (Product O) [$8,000+$19,000+$12,000]39,000 
      Work in process 39,000
 (To record the transfer of Job no.102 to  Product O)  
    
 Finished goods (Product P) [$9,000+$20,500+$13,200]42,700 
      Work in process 42,700
 (To record the transfer of Job no.103 to  Product P)  
    
j.Accounts receivable50,000 
      Sales  50,000
 (To record sale of product N)  
    
 Cost of goods sold [$10,000+$22,000+$14,400]46,400 
      Finished goods (Product N) 46,400
 (To record cost of goods sold on finished goods of Product N)  
    
 Accounts receivable45,400 
      Sales  45,400
 (To record sale of product O)  
    
 Cost of goods sold  [$8,000+$19,000+$12,000]39,000 
      Finished goods (Product O) 39,000
 (To record cost of goods sold on finished goods of Product O)  
    
k.Factory  overhead 200 
      Cost of goods sold (2) 200
 (To record cost of  goods sold)  

 (Table 1)

Working note:

(1) Calculate the actual factory overhead:

 Actual factory overhead = (Indirect materials+Indirect labor+Payment of electricity bill+Depreciation expense)=$8,000+$15,000+$8,000+$30,000=$61,000

(2) Calculate the cost of goods sold:

Cost of goods sold = Actual factory overheadApplied factory overhead=$61,000(1)$61,200=$200(overapplied)

2.

Expert Solution
Check Mark
To determine

Post the entries to the work in process and finished goods T accounts and determine the ending balances in these accounts.

Explanation of Solution

Post the entries to the work in process and finished goods T accounts and determine the ending balances in these accounts.

EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL, Chapter 26, Problem 10SPA , additional homework tip  1

EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL, Chapter 26, Problem 10SPA , additional homework tip  2

3.

Expert Solution
Check Mark
To determine

Compute the balance in the job cost ledger and verify whether the balance agrees with that in the work in process control account.

Explanation of Solution

The balance of the job cost ledger (Job No.104) is $66,600 [$15,000+$30,000+$21,600s] is balances with the work in process control account of $66,600.

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Chapter 26 Solutions

EP CENGAGENOWV2 FOR HEINTZ/PARRY'S COLL

Ch. 26 - Prob. 1CECh. 26 - Prob. 2CECh. 26 - Prob. 3CECh. 26 - Prob. 1RQCh. 26 - Prob. 2RQCh. 26 - Prob. 3RQCh. 26 - Prob. 4RQCh. 26 - Prob. 5RQCh. 26 - Prob. 6RQCh. 26 - Prob. 7RQCh. 26 - Prob. 8RQCh. 26 - Prob. 9RQCh. 26 - Prob. 10RQCh. 26 - Prob. 11RQCh. 26 - Prob. 12RQCh. 26 - Prob. 13RQCh. 26 - Prob. 14RQCh. 26 - Prob. 15RQCh. 26 - COST OF GOODS SOLD SECTION The following...Ch. 26 - SCHEDULE OF COST OF GOODS MANUFACTURED The...Ch. 26 - JOURNAL ENTRIES FOR MATERIAL, LABOR, AND OVERHEAD...Ch. 26 - JOURNAL ENTRIES FOR FACTORY OVERHEAD Huang Company...Ch. 26 - PREDETERMINED FACTORY OVERHEAD RATE Millerlile...Ch. 26 - JOURNAL ENTRIES FOR MATERIAL, LABOR, OVERHEAD, AND...Ch. 26 - SCHEDULE OF COST OF GOODS MANUFACTURED AND COST OF...Ch. 26 - JOURNAL ENTRIES FOR MATERIAL, LABOR, AND OVERHEAD...Ch. 26 - JOB ORDER COSTING TRANSACTIONS Stonestreet...Ch. 26 - JOB ORDER COSTING WITH UNDER- AND OVERAPPLIED...Ch. 26 - COST OF GOODS SOLD SECTION The following...Ch. 26 - SCHEDULE OF COST OF GOODS MANUFACTURED The...Ch. 26 - JOURNAL ENTRIES FOR MATERIAL, LABOR, AND OVERHEAD...Ch. 26 - JOURNAL ENTRIES FOR FACTORY OVERHEAD Bandy Company...Ch. 26 - PREDETERMINED FACTORY OVERHEAD RATE Marston...Ch. 26 - JOURNAL ENTRIES FOR MATERIAL. LABOR, OVERHEAD, AND...Ch. 26 - SCHEDULE OF COST OF GOODS MANUFACTURED AND COST OF...Ch. 26 - Prob. 8SPBCh. 26 - JOB ORDER COSTING TRANSACTIONS D K Enterprises...Ch. 26 - Prob. 10SPBCh. 26 - Prob. 1MYWCh. 26 - Forester Manufacturing Company uses a job order...Ch. 26 - Prob. 1CP
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