The Shotz Company had the following transactions and events during its first year of operations. Estimated overhead for the year was $770,000; estimated direct labor cost for the year was $350,000.
1. Purchased materials on account, $567,000.
2. Requisitioned materials for production as follows: direct materials - 85 percent of purchases, indirect materials - 12 percent of purchases.
3. Direct labor for production is $331,000, indirect labor is $125,000.
4. Overhead incurred (not including materials or labor): $529,000.
5. Overhead is applied to production based on direct labor cost at the rate of ________.
6. Goods costing $976,000 were completed during the period.
7. Goods costing $513,200 were sold on account for $776,000.
Required:
(a) Prepare the journal entries to record the transactions for the year.
(b) Prepare the journal entry to prorate the over- or underapplied overhead to the appropriate accounts.

Question

Quizplus · Accepted Answer

The Answer of The Shotz Company had the following transactions and events during its first year of operations. Estimated overhead for the year was $770,000; estimated direct labor cost for the year was $350,000.
1. Purchased materials on account, $567,000.
2. Requisitioned materials for production as follows: direct materials - 85 percent of purchases, indirect materials - 12 percent of purchases.
3. Direct labor for production is $331,000, indirect labor is $125,000.
4. Overhead incurred (not including materials or labor): $529,000.
5. Overhead is applied to production based on direct labor cost at the rate of ________.
6. Goods costing $976,000 were completed during the period.
7. Goods costing $513,200 were sold on account for $776,000.
Required:
(a) Prepare the journal entries to record the transactions for the year.
(b) Prepare the journal entry to prorate the over- or underapplied overhead to the appropriate accounts.

The Shotz Company Had the Following Transactions and Events During