Chap 2 E14 JE T Accounts

EXERCISE 2-14 Journal Entries and T-accounts
The Polaris Company uses a job-order costing system. The following data relate to
October, the first month of the company's fiscal year.
a. Raw materials purchased on account, $210,000.
b. Raw materials issued to production, $190,000 ($178,000 direct materials and
$12,000 indirect materials).
c. Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.
d. Depreciation recorded on factory equipment, $40,000.
e. Other manufacturing overhead costs incurred during October, $70,000 (credit
Accounts Payable).
f. The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.
g. Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.

Required:
1. Prepare journal entries to record the information given above.
Answer
a. Raw Materials Inventory ....................................
Accounts Payable............................................

210,000
210,000

b. Work in Process.................................................
Manufacturing Overhead ....................................
Raw Materials Inventory..................................

178,000
12,000

c.

Work in Process.................................................
Manufacturing Overhead ....................................
Salaries and Wages Payable ............................

90,000
110,000

d. Manufacturing Overhead ....................................
Accumulated Depreciation ...............................

40,000

e. Manufacturing Overhead ....................................
Accounts Payable............................................

70,000

f.

Work in