27.03.2023 - 21:22

Quark Spy Equipment manufactures espionage equipment. Quark uses a job-order costing system and applies overhead to jobs on the basis of direct labor hours. For the current year, Quark estimated that it would work 52,000 direct labor hours and incur $12,7

Question:

Quark Spy Equipment manufactures espionage equipment. Quark uses a job-order costing system and applies overhead to jobs on the basis of direct labor hours. For the current year, Quark estimated that it would work 52,000 direct labor hours and incur $12,792,000 of manufacturing overhead costs. The following summarized information relates to January of the current year. The raw materials purchased include both direct and indirect materials.

Raw materials purchased on account $903,000
Direct materials requisitioned into production $831,400
Indirect materials requisitioned into production $63,100
Direct labor cost (5,000 hours @ $34 per hour) $170,000
Indirect labor cost (5,600 hours @ $21 per hour) $117,600
Depreciation on the factory building $137,300
Depreciation on the factory equipment $642,000
Utilities for the factory $57,700
Cost of jobs finished $1,808,400
Cost of jobs sold $1,725,900
Sales (all on account) $2,589,200

Required:

Prepare journal entries to record Quark’s transactions for the month of January. Do not close out the manufacturing overhead account.

Answers (1)
  • Olive
    April 4, 2023 в 09:59
    There are several journal entries that need to be recorded based on the information provided in the table. Here are the entries: 1. Raw materials purchased on account Debit: Raw Materials Purchases $903,000 Credit: Accounts Payable $903,000 2. Direct materials requisitioned into production Debit: Work in Process $831,400 Credit: Raw Materials Inventory $831,400 3. Indirect materials requisitioned into production Debit: Manufacturing Overhead $63,100 Credit: Raw Materials Inventory $63,100 4. Direct labor cost Debit: Work in Process $170,000 Credit: Cash $170,000 5. Indirect labor cost Debit: Manufacturing Overhead $117,600 Credit: Wages Payable $117,600 6. Depreciation on the factory building Debit: Manufacturing Overhead $137,300 Credit: Accumulated Depreciation-Facilities $137,300 7. Depreciation on the factory equipment Debit: Manufacturing Overhead $642,000 Credit: Accumulated Depreciation-Equipment $642,000 8. Utilities for the factory Debit: Manufacturing Overhead $57,700 Credit: Accounts Payable $57,700 9. Cost of jobs finished Debit: Finished Goods Inventory $1,808,400 Credit: Work in Process $1,808,400 10. Cost of jobs sold Debit: Cost of Goods Sold $1,725,900 Credit: Finished Goods Inventory $1,725,900 11. Sales (all on account) Debit: Accounts Receivable $2,589,200 Credit: Sales Revenue $2,589,200 These entries will ensure that all of Quark's transactions for the month of January are properly recorded. It is important to note that the manufacturing overhead account should not be closed out at this time, as it will continue to accumulate costs throughout the year.
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