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, $190,000 ($152,000 direct materials and $38,000 indirect materials). Accrued direct labor cost of $49,000 and indirect labor cost of $21,000. Depreciation recorded on factory equipment, $105,000. Other manufacturing overhead costs accrued during October, $131,000. The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,200 machine-hours were used in October. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods. Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 22% 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 $34,000.

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:

  1. Raw materials purchased on account, $210,000.
  2. Raw materials used in production, $190,000 ($152,000 direct materials and $38,000 indirect materials).
  3. Accrued direct labor cost of $49,000 and indirect labor cost of $21,000.
  4. Depreciation recorded on factory equipment, $105,000.
  5. Other manufacturing overhead costs accrued during October, $131,000.
  6. The company applies manufacturing overhead cost to production using a predetermined rate of $5 per machine-hour. A total of 76,200 machine-hours were used in October.
  7. Jobs costing $512,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
  8. Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 22% 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 $34,000.

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