The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fiscal year.
a. Raw materials purchased on account, $210,000.
b. Raw materials issued to production, $191,000 ($152,800 direct materials and $38,200 indirect materials).
c. Direct labor cost incurred, $49,000; indirect labor cost incurred, $20,000.
d. Depreciation recorded on factory equipment, $105,000.
e. Other manufacturing overhead costs incurred during October, $130,000 (credit Accounts Payable).
f. The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 76,300 machine-hours were recorded for October.
g. Production orders costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Production orders that had cost $453,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 26% above cost.
Required:
1. Prepare journal entries to record the information given above
2. Prepare T account for Manufacturing Overhead and work in process. Post the relevant transaction from above to each account. Compute the ending balance in each account, assuming that work in process has a beginning balance of $37,000
(1.a) Record the journal entry for purchase of raw material as given below:
(1.b) Journal entry for the issuance of material for production as given below:
(1.c) Journal entry for direct and indirect labor cost incurred as given below:
(1.d) Journal entry for recording depreciation as given below:
(1.e) Journal entry for manufacturing overheads incurred as given below:
(1.f) Journalize the transaction of overheads absorbed as given below:
(1.g) Journal entry for finished goods as given below:
(1.h)Journal entry for finished goods available for sale as given below: