Question

Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold During May, the following transactions were completed and reported by Jerico Company: Materials purchased on account, $60,100. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,800. Payroll for the month: direct labor, $75,000; indirect labor, $36,000; administrative, $28,000; sales, $19,000. Depreciation on factory plant and equipment, $10,400. Property taxes on the factory accrued during the month, $1,450. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200. Factory utilities, $5,500. Advertising paid with cash, $7,900. Depreciation on office equipment, $800; on sales vehicles, $1,650. Legal fees incurred but not yet paid for preparation of lease agreements, $750. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month. Cost of jobs completed during the month, $160,000. The company also reported the following beginning balances in its inventory accounts: Materials Inventory $7,500 Work-in-Process Inventory 37,000 Finished Goods Inventory 50,000 Required:

1. Prepare journal entries to record the transactions occurring in May. For a compound transaction, if an amount box does not require an entry, leave it blank. a. b. c. d. e. f. g. h. i. j. k. l.

2. Prepare T-accounts for Materials Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post the entries to the T-account in the same order in which they were journalized. Materials Inventory Balance Work in Process Inventory Balance Finished Goods Inventory Balance Overhead Control Balance

3. Prepare a statement of cost of goods manufactured. Jerico Company Statement of Cost of Goods Manufactured For the Month Ended May 31, 20XX $ Overhead: $ $ Manufacturing costs added $ Cost of goods manufactured $

4. If the overhead variance is all allocated to cost of goods sold, by how much will cost of goods sold decrease or increase? by $

Answer 1

Answer:

1. Dr Raw material 60100

          Cr  Account payable  60100  (Material purchased on account)

2. Dr work in process   50000

        Cr   Raw material          50000 (Direct material used)

3. Dr Over head 8800

       Cr Raw material   8800 (indirect material used)

4. Dr work in process 75000

      Cr     Factory payroll    75000 (Direct labor used)

5. Dr. Overhead   36000

      Cr  factory payroll      36000 (Indirect labor used)

6. Dr Administrative expense  28000

               Cr  Account Payable                       28000

7. Dr Account receivable 19000

       Cr             sales                  19000

8. Dr Overhead   10400

         Cr accumulated depreciation-factory plant and equipment  10400

9. Dr Overhead     1450

         Property tax payable   1450( Property tax was payable)

10. Dr Overhead   6200

                      Cr prepaid insurance    6200 (Insurance expires)

11. Dr Overhead   7900

                   Cr Cash        7900 (Advertising made on cash)

12. Dr Overhead      800

           Cr     Accumulated depreciation-office equipment    800

                (Depreciation of office equipment)

13. Dr Sales vehicles 1650

                 Cr  Cash                1650 (purchase sales vehicle)

14. Dr Overhead  750

          Cr Account payable 750 (legal fee incurred but not payable)

15.  Dr work in process  72000

              Cr Applied overhead       72000

( to record applied overhead= 18 * 4000 direct labor  = 72000)

16. Dr finished goods   160000

          Cr    work in process      160000 ( to record cost of jobs completed)

Explanation:

Material                               Work in process                    Factory payroll

_Dr______Cr___            ___Dr______Cr_____             _Dr______Cr___

 60100= 50000                 50000=                                              =75000

            =8800                     75000                                                =36000

Account Payable                Overhead               Cost of goods Manufactured

_Dr_____Cr___            _Dr______Cr___            _Dr______Cr___        

             =60100             8800 =

             =28000             36000=

                                        10400=

                                         1450=

                                        6200=

Cost of goods sold          Finished goods            Account receivable

_Dr______Cr___            _Dr______Cr___            _Dr______Cr___    

                                                                                  19000=

Sales                                          Accumulated deprecition-plant

_Dr______Cr___                              _Dr______Cr___

          =19000                                                 =10400

 Administrative                  Propert tax payable           Prepaid insurance

Expense

_Dr______Cr___            _Dr______Cr___                 _Dr______Cr___  

28000=                                        =1450                                      =6200

Answer 2

Answer:

please the answer below

Explanation:

1. Prepare journal entries: ($)

  Dr   Cr

Materials inventory                60, 100    

Accounts Payable             60, 100

Work-In-Process inventory      50, 000

Overhead control        8, 800

Materials inventory      58, 800

Work-In-Process inventory    75, 000

Overhead control      36, 000

Administrative expenses    28, 000

Selling expenses     19, 000

Salaries and wages           158, 000

Overhead control     10, 400

Accumulated Depreciation      10, 400

Overhead control      1, 450

Property tax payable      1, 450

Overhead control     6, 200

Property tax payable      6, 200

Overhead control      5, 500

Utility expense       5, 500

Selling expenses      7, 900

Bank               7, 900

Administrative expenses   800

Selling expenses     1, 650

Accounts payable             2, 450

Administrative expenses   750

Legal fees              750

Work-In-Process inventory   72, 000

Overhead control             72, 000

Finished goods   160, 000

Work-In-Process inventory          160, 000

2. Prepare T-Accounts:

Materials Inventory

75, 000  58, 800

60, 000

8, 800

Work-In-Process inventory

37, 000  160, 000

50, 000

75, 000

72, 000

74, 000

Finished Good

50, 000

160, 000

210, 000

Overhead Control

8, 800  72, 000

36, 000

10, 400

1, 450

6, 200

5, 500

3. Prepare the statement of cost of goods sold

Direct material   50, 000

Direct labor   75, 000

Overhead expenses  72, 000

Total cost of manufacturing     197, 000

Add: Work-In-Process (beginning)    37, 000

Less: Work-In-Process (end)     (74, 000)

Total cost of goods sold      160, 000

4. How much will the cost of goods sold change:

(a) Calculate the variance:

= 72, 000 – (8, 800 + 36, 000 + 10, 400 + 1, 450 + 6, 200 + 5, 500)

= 3, 650

Cost of goods sold, considering the variance in Work-In-Process:

Direct material   50, 000

Direct labor   75, 000

Overhead expenses  68, 350 (72, 000 – 3, 650)

Total cost of manufacturing     193, 350

Add: Work-In-Process (beginning)    37, 000

Less: Work-In-Process (end)     (74, 000)

Total cost of goods sold      156, 350

The cost of goods sold decreased by $3, 650