1. Josie Inc. has provided the following information for 20x5:
a. Purchased raw materials on account for $120,000.
b. Issued $115,000 in raw materials to production ($22,000 were not traceable to specific jobs).
c. Incurred $115,000 in direct labor costs (14,375 hours) and $62,500 in supervision costs (paid
in cash).
d. Incurred the following additional manufacturing overhead costs: factory lease $24,000 (paid
in cash); depreciation on equipment $20,000; custodial supplies $7,500 (paid in cash).
e. Incurred the following nonmanufacturing costs, both paid in cash: advertising $75,000; sales
commissions $88,000.
f. Applied manufacturing overhead to jobs in process at a rate of $10 per direct labor hour.
g. Completed jobs costing a total of $345,000.
h. Sold jobs for $425,000 on account. The cost of the jobs was $342,000.
i. Closed the Manufacturing Overhead account balance.
Prepare the journal entries to record these transactions.
Solution
Date Account titles and explanation Debit $ Credit $ Inventory $ 120,000 Accounts
payable $ 120,000 Work in progress $ 93,000 Indirect materials $ 22,000 Inventory
$ 115,000 Direct labor $ 115,000 Indirect labor $ 62,500 Cash $ 177,500
Factory overheads $ 51,500 Factory lease $ 24,000 Depreciation on equipment $
20,000 Custodial supplies $ 7,500 Custodial supplies $ 7,500 Cash $ 7,500
Advertising $ 75,000 Sales commission $ 88,000 Cash $ 163,000 Work in
progress $ 143,750 Factory overheads $ 143,750 Cost of finished goods $ 345,000
Work in progress $ 345,000 Accounts receivable $ 425,000 Sales revenue $ 425,000
Cost of goods sold $ 342,000 Cost of finished goods $ 342,000 Factory overheads
$ 7,750 Work in progress $ 7,750