The Polaris Company uses a job-order costing system. The fo

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Polaris Company uses a job-order costing system. The following transactions occurred in October:

 

Raw materials purchased on account, $210,000.

Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials).

 

Accrued direct labor cost of $49,000 and indirect labor cost of $21,000.

Depreciation recorded on factory equipment, $104,000.

Other manufacturing overhead costs accrued during October, $131,000.

 

The company applies manufacturing overhead cost to production using a predetermined rate of $9 per machine-hour. A total of 76,400 machine-hours were used in October.

Jobs costing $515,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

Jobs that had cost $449,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 30% above cost.

Required:

 

1. Prepare journal entries to record the transactions given above.

 

2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account.

Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.

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