EXERCISE 3–11 Journal Entries and T-Accounts [LO2, LO4, LO5]
Foley Company uses a job-order costing system. The following data relate to the month of 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 (80% direct and 20% indirect).
c. Direct labor cost incurred, $49,000; and indirect labor cost incurred, $21,000.
d. Depreciation recorded on factory equipment, $105,000.
e. Other manufacturing overhead costs incurred during October, $130,000 (credit Accounts Payable).
f. The company applies manufacturing overhead cost to production on the basis of $4 per machine-hour. A total of 75,000 machine-hours were recorded for October.
g. Production orders costing $510,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Production orders that had cost $450,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 50% above cost.
1. Prepare journal entries to record the information given above.
2. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant infor- mation above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $35,000.