Chapter 4, Problem 4.30E

Journal entries, T-accounts, and source documents. Visual Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2017:

Costs incurred:
Purchases of direct materials (net) on credit	$121,000
Direct manufacturing labor cost	87,000
Indirect labor	54,400
Depreciation, factory equipment	53,000
Depreciation, office equipment	7,700
Maintenance, factory equipment	46,000
Miscellaneous factory overhead	9,100
Rent, factory building	99,000
Advertising expense	97,000
Sales commissions	39,000

Inventories:
	January 1, 2017	December 31, 2017
Direct materials	$ 9,400	$18,000
Work in process	6,500	26,000
Finished goods	60,000	31,000

Visual Co. uses a normal-costing system and allocates overhead to work in process at a rate of $3.10 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.

Required

1. 1. Prepare journal entries to record the transactions for 2017 including an entry to close out over- or underallocated overhead to cost of goods sold. For each journal entry indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry.
2. 2. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, the Manufacturing Overhead Control Account, and the Manufacturing Overhead Allocated Account.