Question
E3-29A Record journal entries (Learning Objectives 2, 3, 5, & 6) The following transactions were incurred...
E3-29A Record journal entries (Learning Objectives 2, 3, 5, & 6) The following transactions were incurred by Whooley Fabricators during January, the first month of its fiscal year. Requirements 1. Record the proper journal entry for each transaction. a. $205,000 of materials was purchased on account. b. $174,000 of materials was used in production; of this amount, $146,000 was used on specific jobs. c. Manufacturing labor and salaries for the month totaled $210,000. $200,000 of the total manufacturing labor and salaries was traced to specific jobs, and the remain- der was indirect labor used in the factory. d. The company recorded $16,000 of depreciation on the plant and plant equipment. The company also received a plant utility bill for $14,000. e. $56,000 of manufacturing overhead was allocated to specific jobs. 2. By the end of January, was manufacturing overhead overallocated or underallocated? By how much?
Answers
Answer-:
1). Journal entry in the books of whooley fabricators for given transactions are as follows-:
S.no. Particulars Debit Credit a). Raw materials inventory........dr 205000 To accounts payable a/c 205000 b). WIP inventory..........................dr 146000 Manufacturing overhead.........dr 28000 To raw material inventory A/c 174000 c). WIP inventory.............................dr 200000 Manufacturing overhead............dr 10000 To wages payable 210000 d). Manufacturing overhead..............dr 30000 To accounts payable a/c 14000 To accumulated depreciation 16000 e). WIP inventory.................................dr 56000 To manufacturing overhead a/c 56000 2). Calculation of under or over allocation of manufacturing overhead are as follows-:
Allocated overhead to specified jobs = $56,000
Actual overhead incurred
= Indirect material+ indirect labour+ depreciation
= 28,000+ 10,000+ 30,000
= $58,000
So, there is an underallocation of manufacturing overhead of $2,000.
Thankyou.......
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