FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:**Journal Entry Preparation Guide**
To accurately record financial transactions for job sales during the month, filling out journal entries correctly is essential. Follow the steps below to ensure precision and compliance with accounting standards.
1. **Sales Entry:**
- **Account Titles and Explanation:**
- Fill in the appropriate accounts to reflect the sale of a job.
- **Debit and Credit Columns:**
- Input the respective amounts to maintain a balanced entry.
- **Note:** Credit account titles will automatically be indented when the amount is entered.
*(1) This entry records the sale of jobs.*
2. **Cost of Jobs Entry:**
- **Account Titles and Explanation:**
- Select accounts that account for the cost associated with producing or delivering jobs.
- **Debit and Credit Columns:**
- Enter the amounts for costs, ensuring the entry balances.
*(2) This entry records the cost of jobs.*
By carefully documenting each transaction, you will maintain accurate financial records that provide valuable insights into the company's economic events.
Transcribed Image Text:**Lott Company Production and Cost Analysis**
Lott Company employs a job order cost system and calculates overhead applied to production based on direct labor costs. As of January 1, 2020, Job 50 was the exclusive job in process. Costs incurred prior to this date were as follows: direct materials costing $23,200, direct labor of $13,920, and manufacturing overhead totaling $18,560. By this date, Job 49 was already completed at a cost of $104,400 and was part of the finished goods inventory. The Raw Materials Inventory account held a balance of $17,400.
**January Production Activity:**
During January, Lott Company initiated production on Jobs 51 and 52. Jobs 49 and 50 were completed and sold on account during the month for $141,520 and $183,280, respectively. Additional events during the month included:
1. Purchased additional raw materials costing $104,400 on account.
2. Incurred factory labor costs amounting to $81,200, which included $18,560 for employer payroll taxes.
3. Manufacturing overhead costs were incurred as follows:
- Indirect materials: $19,720
- Indirect labor: $23,200
- Depreciation expense on equipment: $13,920
- Other manufacturing overhead costs on account: $18,560
4. Direct materials and direct labor were assigned to jobs as outlined below:
| Job No. | Direct Materials | Direct Labor |
|---------|------------------|--------------|
| 50 | $11,600 | $5,800 |
| 51 | $45,240 | $29,000 |
| 52 | $34,800 | $23,200 |
This detailed breakdown assists in understanding the allocation and flow of costs within Lott Company’s production for that period.
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