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tine 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 Materials Requisition Slips Labor Time Tickets
429 $2,500 $1,900
430 3,500 3,000
431 4,400 $10,400 7,600 $12,500
General use 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.

Required:
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.

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Answer:

1. Dr Work in Process Inventory $10,400

Dr Manufacturing Overhead $800

Cr Raw Materials Inventory $11,200

2. Dr Work in Process Inventory $12,500

Dr Manufacturing Overhead $1,200

Cr Factory Labor $13,700

3.Dr Work in Process Inventory $7,500

Cr Manufacturing Overhead $7,500

4. 31-May

Dr Finished Good Inventory $7,540

Cr Work in Process Inventory $7,540

Explanation:

1. Preparation of the summary journal entries to record (1) the requisition slips,

31-May

Dr Work in Process Inventory $10,400

Dr Manufacturing Overhead $800

Cr Raw Materials Inventory $11,200

(To record requisition slips)

2.Preparation of the summary journal entries to record the time tickets

31-May

Dr Work in Process Inventory $12,500

Dr Manufacturing Overhead $1,200

Cr Factory Labor $13,700

(To record t time tickets)

3. Preparation of the summary journal entries to record the assignment of manufacturing overhead to jobs

31-May

Dr Work in Process Inventory $7,500

($12,500*60%)

Cr Manufacturing Overhead $7,500

(To record assignment of manufacturing overhead to jobs)

4. Preparation of the summary journal entries to record the completion of Job No. 429.

31-May

Dr Finished Good Inventory $7,540

Cr Work in Process Inventory $7,540

($2,000+$2,500+$1,900+$1,140)

(To record the completion of Job No. 429)

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