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    Banitog - Chapter 6 (Problem 1)

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    Myunimint
    The Mayhem Company uses a job-order costing system. The following journal entries record transactions for the first month of the fiscal year: (1) Raw materials purchased are recorded as an increase to inventory and accounts payable, (2) Issuing raw materials to production increases WIP and decreases inventory, (3) Labor costs increase WIP and decrease payables, (4) Depreciation increases overhead and accumulated depreciation, (5) Other expenses increase overhead and decrease payables, (6) Applying overhead increases WIP and decreases overhead, (7) Completed jobs transfer to finished goods and out of WIP, (8) Sales are recorded upon shipping completed goods to customers at a 25% markup over cost

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    Banitog - Chapter 6 (Problem 1)

    Uploaded by

    Myunimint
    2K views3 pages
    The Mayhem Company uses a job-order costing system. The following journal entries record transactions for the first month of the fiscal year: (1) Raw materials purchased are recorded as an increase to inventory and accounts payable, (2) Issuing raw materials to production increases WIP and decreases inventory, (3) Labor costs increase WIP and decrease payables, (4) Depreciation increases overhead and accumulated depreciation, (5) Other expenses increase overhead and decrease payables, (6) Applying overhead increases WIP and decreases overhead, (7) Completed jobs transfer to finished goods and out of WIP, (8) Sales are recorded upon shipping completed goods to customers at a 25% markup over cost

    Original Title

    BANITOG_CHAPTER 6 (PROBLEM 1)

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    The Mayhem Company uses a job-order costing system. The following journal entries record transactions for the first month of the fiscal year: (1) Raw materials purchased are recorded as an increase to inventory and accounts payable, (2) Issuing raw materials to production increases WIP and decreases inventory, (3) Labor costs increase WIP and decrease payables, (4) Depreciation increases overhead and accumulated depreciation, (5) Other expenses increase overhead and decrease payables, (6) Applying overhead increases WIP and decreases overhead, (7) Completed jobs transfer to finished goods and out of WIP, (8) Sales are recorded upon shipping completed goods to customers at a 25% markup over cost

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views3 pages

    Banitog - Chapter 6 (Problem 1)

    Uploaded by

    Myunimint
    The Mayhem Company uses a job-order costing system. The following journal entries record transactions for the first month of the fiscal year: (1) Raw materials purchased are recorded as an increase to inventory and accounts payable, (2) Issuing raw materials to production increases WIP and decreases inventory, (3) Labor costs increase WIP and decrease payables, (4) Depreciation increases overhead and accumulated depreciation, (5) Other expenses increase overhead and decrease payables, (6) Applying overhead increases WIP and decreases overhead, (7) Completed jobs transfer to finished goods and out of WIP, (8) Sales are recorded upon shipping completed goods to customers at a 25% markup over cost

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 3

    BANITOG, BRIGITTE C.

    BSA 211

    CHAPTER 6: Problem 1 (Application of Job-Order Costing)

    The Mayhem 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, P210,000.


    b. Raw materials issued to production, P190,000 (P178,000 direct materials and P12,000 indirect
    materials).
    c. Direct labor cost incurred, P90,000; and indirect labor cost incurred, P110,000.
    d. Depreciation recorded on factory equipment, P40,000.
    e. Other manufacturing overhead costs incurred during October, P70,000 (credit Accounts Payable).
    f. The company applies manufacturing overhead cost to production on the basis of P8 per machine-
    hour. There were 30,000 machine-hours recorded for October.
    g. Production orders costing P520,000 according to their job cost sheets were completed during
    October and transferred to Finished Goods.
    h. Production orders that had cost P480,000 to complete according to their job cost sheets were
    shipped to customers during the month. These goods were sold at 25% above cost. The goods were
    sold on account.
    Required
    1. Prepare journal entries to record the information given above.
    2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant information
    above to each account. Compute the ending balance in each account, assuming that Work in Process
    has a beginning balance of P42,000.

    Requirement 1:

    a) Raw material inventory 210,000

    Accounts payable 210,000

    b) WIP inventory 178,000

    Manufacturing overhead 12,000

    Raw material inventory 190,000

    c) WIP inventory 90,000

    Manufacturing overhead 110,000

    Salaries and wages payable 200,000


    d) Manufacturing overhead 40,000

    Accumulated depreciation-Factory equipment 40,000

    e) Manufacturing overhead 70,000

    Accounts payable 70,000

    f) WIP inventory (30,000 x 8) 240,000

    Manufacturing overhead 240,000

    g) Finished goods inventory 520,000

    WIP inventory 520,000

    h) Accounts receivable (480,000 x 125%) 600,000

    Sales 600,000

    Cost of goods sold 480,000

    Finished goods inventory 480,000

    Requirement 2:

    Work in Process Inventory


    Beginning Balance 42,000 520,000 Transferred to Finished Goods

    Raw Materials 178,000

    Direct Labor 90,000

    Mfg. OH 240,000

    550,000 520,000

    Ending Balance 30,000

    Manufacturing Overhead

    Raw materials 12,000 240,000 Mfg OH Applied

    Labor 110,000

    Other expenses 70,000

    Depreciation 40,000

    232,000 240,000

    8,000 Ending Balance

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