Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

Exercise 10

Journal Entries, T-Accounts
Kapoor Company uses job-order costing. During January, the following data were reported:
a. Materials purchased on account: direct materials, $98,500; indirect materials, $14,800.
b. Materials issued: direct materials, $82,500; indirect materials, $8,800.
c. Labor cost incurred: direct labor, $67,000; indirect labor, $18,750.
d. Other manufacturing costs incurred (all payables), $46,200.
e. Overhead is applied on the basis of 110 percent of direct labor cost.
f. Work finished and transferred to Finished Goods Inventory cost $230,000.
g. Finished goods costing $215,000 were sold on account for 140 percent of cost.
h. Any over- or underapplied overhead is closed to Cost of Goods Sold.
Required:
1. Prepare journal entries to record these transactions.
2. Prepare a T-account for Overhead Control. Post all relevant information to this account. What is the ending balance in this account?
3. Prepare a T-account for Work-in-Process Inventory. Assume a beginning balance of $10,000, and post all relevant information to this account. Did you assign any actual overhead costs to Work-in-Process Inventory? Why or why not?