ACCT G102- The gross earnings of the factory workers

ACCT G102- The gross earnings of the factory workers

Subject: Business    / Accounting
Question
EXERCISES
E2-1 The gross earnings of the factory workers for Larkin Company during the month of
January are $76,000. The employer’s payroll taxes for the factory payroll are $8,000. The
fringe benefits to be paid by the employer on this payroll are $6,000. Of the total accumulated
cost of factory labor, 85% is related to direct labor and 15% is attributable to indirect labor.

Prepare entries for factory
labor.

(LO 1, 2), AP

Instructions
(a) Prepare the entry to record the factory labor costs for the month of January.
(b) Prepare the entry to assign factory labor to production.

E2-2 Stine Company uses a job order cost system. On May 1, the company has a balance
in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and
Job No. 430 $1,500. During May, a summary of source documents reveals the following.
Job Number
429
430
431

Materials
Requisition Slips
$2,500
3,500
4,400

(LO 1, 2, 3, 4), AP

Labor
Time Tickets

$10,400

General use

Prepare journal entries for
manufacturing costs.

$1,900
3,000
7,600

$12,500

800

1,200

$11,200

$13,700

Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of
direct labor cost. Job No. 429 is completed during the month.
Instructions
(a) Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets,
(3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job
No. 429.
(b) Post the entries to Work in Process Inventory, and prove the agreement of the control
account with the job cost sheets. (Use a T-account.)
E2-3 A job order cost sheet for Ryan Company is shown below.
Job No. 92
Date
Beg. bal. Jan. 1
8
12
25
27

For 2,000 Units
Direct
Materials
5,000
6,000

Direct
Labor

Manufacturing
Overhead

6,000

4,200

8,000

6,400

2,000
13,000

4,000

3,200

18,000

13,800

Cost of completed job:
Direct materials
Direct labor
Manufacturing overhead

$13,000
18,000
13,800

Total cost

$44,800

Unit cost ($44,800 4 2,000)

$22.40

Instructions
(a) On the basis of the foregoing data, answer the following questions.
(1) What was the balance in Work in Process Inventory on January 1 if this was the
only unfinished job?
(2) If manufacturing overhead is applied on the basis of direct labor cost, what overhead rate was used in each year?
(b) Prepare summary entries at January 31 to record the current year’s transactions pertaining to Job No. 92.

Analyze a job cost sheet
and prepare entries for
manufacturing costs.

(LO 1, 2, 3, 4), AP