Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $8,400, direct labor of $3,600, and applied overhead of $3,060. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on credit) for $23,500, Job 121 is started and completed, and Job 122 is started and still in process at the end of July. Custom Cabinetry incurs the following costs during July. Job 120 Job 121 Job 122 Direct materials used $ 2,200 $ 6,700 $ 3,700 Direct labor used 2,600 4,500 2,900 1. Prepare journal entries for the following July transactions and events a through e. a. Direct materials used. b. Direct labor used. c. Overhead applied. d. Sale of Job 120. e. Cost of goods sold for Job 120. Hint: Job 120 has costs from June and July. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (There were no jobs in Finished Goods Inventory at June 30.)

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31-01-2022
Business

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Custom Cabinetry has one job in process (Job 120) as of June 30; at that time, its job cost sheet reports direct materials of $8,400, direct labor of $3,600, and applied overhead of $3,060. Custom Cabinetry applies overhead at the rate of 85% of direct labor cost. During July, Job 120 is sold (on credit) for $23,500, Job 121 is started and completed, and Job 122 is started and still in process at the end of July. Custom Cabinetry incurs the following costs during July. Job 120 Job 121 Job 122 Direct materials used $ 2,200 $ 6,700 $ 3,700 Direct labor used 2,600 4,500 2,900 1. Prepare journal entries for the following July transactions and events a through e. a. Direct materials used. b. Direct labor used. c. Overhead applied. d. Sale of Job 120. e. Cost of goods sold for Job 120. Hint: Job 120 has costs from June and July. 2. Compute the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts. (There were no jobs in Finished Goods Inventory at June 30.)

Sagot :

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anthougo anthougo · Answer 1 · 2022-02-09T05:56:51-05:00

1. The preparation of the journal entries for July transactions and events for Custom Cabinetry are as follows:

a. Direct materials:

Debit Work in Process:

Job 120 $ 2,200

Job 121 $ 6,700

Job 122 $ 3,700

Credit Raw materials $12,600

b. Direct labor used:

Debit Work in Process:

Job 120 $ 2,600

Job 121 $ 4,500

Job 122 $ 2,900

Credit Direct Labor $10,000

c. Overhead applied.

Debit Work in Process:

Job 120 $ 2,210

Job 121 $ 3,825

Job 122 $ 2,465

Credit Manufacturing overhead applied $8,500

d. Sale of Job 120:

Debit Accounts Receivable $23,500

Credit Sales revenue $23,500

To record the sale of Job 120 on account.

e. Cost of goods sold for Job 120:

Debit Cost of goods sold $22,070

Credit Finished Goods: Job 120 $22,070

2. The computation of the July 31 balances of the Work in Process Inventory and the Finished Goods Inventory accounts are as follows:

Work in Process: Job 122 = $9,065

Finished Goods: Job 121 = $15,025

What is Job Costing?

Job Costing is a costing method that ascribes the costs and revenues to jobs. This enables the system to capture the profit or loss generated per job.

Data and Calculations:

Balance of Job 120 as of June 30:

Direct materials of $8,400

Direct labor of $3,600

Applied overhead of $3,060

Total cost = $15,060

Cost incurred in July:

Job 120 Job 121 Job 122 Total

Beginning balance $15,060 $15,060

Direct materials used $ 2,200 $ 6,700 $ 3,700 12,600

Direct labor used 2,600 4,500 2,900 10,000

Overhead applied (85%) 2,210 3,825 2,465 8,500

Total costs incurred $22,070 $15,025 $9,065 $46,160

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What is Job Costing?

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