Question

Kurtz Fencing Inc. uses a job order cost system.
The following data summarize the operations related to production for March, the first month of operations
a. Materials purchased on account, $45,000
b. Materials requisitioned and factory labor used:
Job Materials Factory Labor
301 $1,850 $2,500
302 3,150 7,220
303 2,200 5,350
304 1,800 2,400
305 4,230 6,225
306 1,770 2,900
For general factory use 1,200 5,000
c. Factory overhead costs incurred on account, $1,800
d. Depreciation of machinery and equipment, $2,500
e. The factory overhead rate is $30 per machine hour. Machine hours used:
Job Machine-Hours
301 30
302 60
303 41
304 63
305 70
306 36
Total 300
f. Jobs completed: 301, 302, 303 and 305
g. Jobs were shipped and customers billed as follows: Job 301, $8,500; Job 302, $16,150; Job 303, $13,400
Required:
1. Journalize the entries to record the summarized operations.
Record each item as an individual entry on March 31.
Record item g as 2 entries.
2. Post the appropriate entries to T-accounts for Work in Process and Finished Goods, using the identifying letters as transaction codes.
Insert memo account balances as of the end of the month.
Determine the correct ending balance.
3. Prepare a schedule of unfinished jobs to support the balance in the Work in Process account.
4. Prepare a schedule of completed jobs on hand to support the balance in the Finished Goods account.

Answer 1

Answer:

Required 1.

a.

Raw Materials $45,000 (debit)

Accounts Payable $45,000 (credit)

b.

Materials

Work  - In Process : 301  $1,850 (debit)

Work  - In Process : 302  $3,150 (debit)

Work  - In Process : 303  $2,200 (debit)

Work  - In Process : 304  $1,800 (debit)

Work  - In Process : 305  $4,230 (debit)

Work  - In Process : 306  $1,770 (debit)

Work  - In Process : Indirect Materials $1,200 (debit)

Raw Materials $16,200 (credit)

Labor

Work  - In Process : 301  $2,500 (debit)

Work  - In Process : 302  $7,220 (debit)

Work  - In Process : 303  $5,350 (debit)

Work  - In Process : 304  $2,400 (debit)

Work  - In Process : 305  $6,225 (debit)

Work  - In Process : 306  $2,900 (debit)

Work  - In Process : Indirect labor $5,000 (debit)

Salaries Payable  $31,595 (credit)

c.

Factory Overheads $1,800 (debit)

Account Payable $1,800 (credit)

d.

Work  - In Process : Depreciation $2,500 (debit)

Accumulated Depreciation $2,500 (credit)

e.

Work  - In Process : 301  $900 (debit)

Work  - In Process : 302  $1,800 (debit)

Work  - In Process : 303  $1,230 (debit)

Work  - In Process : 304  $1,890 (debit)

Work  - In Process : 305  $2,100 (debit)

Work  - In Process : 306  $1,080 (debit)

Factory Overheads  $9,000 (credit)

g.

Finished Goods Inventory : 301 (debit)

Finished Goods Inventory : 302 (debit)

Finished Goods Inventory : 303 (debit)

Finished Goods Inventory : 305 (debit)

Work  - In Process Inventory : 301 (credit)

Work  - In Process Inventory : 302 (credit)

Work  - In Process Inventory : 303 (credit)

Work  - In Process Inventory : 305 (credit)

Required 2.

Work In Process T- Account

Debit :

Raw Materials $16,200

Direct Labor $31,595

Overheads

Credit :

Finished Goods

Closing Balance

Finished Goods Inventory T- Account

Debit :

Work In Process

Credit :

Cost of Goods Sold

Closing Balance

Explanation:

Cost of Job 301

Direct Materials               $1,850

Direct Labor                    $2,500

Factory Overheads           $900

Total Cost                       $5,250

Cost of Job 302

Direct Materials               $1,850

Direct Labor                    $2,500

Factory Overheads           $900

Total Cost                       $5,250

Cost of Job 303

Direct Materials               $1,850

Direct Labor                    $2,500

Factory Overheads           $900

Total Cost                       $5,250

Cost of Job 304

Direct Materials               $1,850

Direct Labor                    $2,500

Factory Overheads           $900

Total Cost                       $5,250

Answer 2

1. The journal entries to record the operations of Kurtz Fencing Inc. in March are as follows:

Journal Entries:

a. Debit Raw materials $45,000

Credit Accounts Payable $45,000

b. Debit Work in Process $41,595

Credit Raw materials $15,000

Credit Factory Labor $26,595

c. Debit Factory Overhead $1,800

Credit Accounts Payable $1,800

d. Debit Factory Overhead $2,500

Credit Depreciation Expense $2,500

e. Debit Work in Process $9,000

Credit Factory Overhead (applied) $9,000

f. Debit Finished Goods $38,755

Credit Work in Process $38,755

g. Debit Cost of goods sold $26,200

Credit Finished Goods $26,200

g. Debit Accounts Receivable $38,050

Credit Sales Revenue $38,050

2. T-accounts:

Work in Process

Descriptions                              Debit       Credit

Beginning balance                     $

b. Raw materials                      $15,000

b. Factory Labor                     $26,595

e. Factory Overhead (applied) $9,000

f. Finished Goods                                 $38,755

Ending balance                                      $11,840

Finished Goods

Descriptions                              Debit       Credit

Beginning balance                 $

Work in Process                     $38,755

g. Cost of goods sold                           $26,200

Ending balance                                      $12,555

3. The Schedule of Unfinished Jobs:

Job     Materials      Factory Labor    Overhead         Total

304       $1,800          $2,400               $1,890        $6,090

306       $1,770          $2,900               $1,080        $5,750

Total    $3,570          $5,300               $2,970       $11,840

4. The Schedule of Completed Jobs on Hand:

Job     Materials      Factory Labor  Overhead      Total

301        $1,850           $2,500               $900         $5,250

302         3,150             7,220               $1,800        $12,170

303        2,200            5,350               $1,230         $8,780

305        4,230            6,225               $2,100       $12,555

Total   $11,430        $21,295              $6,030       $38,755

Data and Calculations:

a. Raw materials $45,000 Accounts Payable $45,000

b. Work in Process $41,595 Raw materials $15,000 Factory Labor $26,595

c. Factory Overhead $1,800 Accounts Payable $1,800

d. Factory Overhead $2,500 Depreciation Expense $2,500

e. Work in Process $9,000 Factory Overhead (applied) $9,000

f. Finished Goods $38,755 Work in Process $38,755

g. Cost of goods sold $26,200 Finished Goods $26,200

g. Accounts Receivable $38,050 Sales Revenue $38,050

b. Job     Materials      Factory Labor  Overhead      Total

301        $1,850           $2,500               $900         $5,250

302         3,150             7,220               $1,800        $12,170

303        2,200            5,350               $1,230         $8,780

304         1,800            2,400               $1,890        $6,090

305        4,230            6,225               $2,100       $12,555

306         1,770            2,900               $1,080        $5,750

Total  $15,000       $26,595              $9,000      $50,595

Job   Machine-Hours  Overhead Applied

301           30                  $900 ($30 x 30)

302         60                  $1,800 ($30 x 60)

303         41                   $1,230 ($30 x 41)

304        63                  $1,890 ($30 x 63)

305        70                  $2,100 ($30 x 70)

306        36                 $1,080 ($30 x 36)

Total    300               $9,000

f. Completed Jobs:

Job     Materials      Factory Labor  Overhead      Total

301        $1,850           $2,500               $900         $5,250

302         3,150             7,220               $1,800        $12,170

303        2,200            5,350               $1,230         $8,780

305        4,230            6,225               $2,100       $12,555

Total   $11,430        $21,295              $6,030       $38,755

Jobs shipped and billed to customers:

                     Revenue      Cost

Job 301,         $8,500      $5,250

Job 302,       $16,150      $12,170

Job 303,      $13,400      $8,780

Total           $38,050   $26,200

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