Regington Computers uses a job-order costing system. The following transactions occurred during May. While interning at Regington Computers, Nicki Olson was asked to prepare journal entries, in good form, for the following transactions:
1) Raw materials purchased on account, $200,000.
2) Raw materials used in production, $180,000 ($170,000 direct materials and $10,000 indirect materials).
3) Direct labor cost of $70,000 and indirect labor cost of $20,000.
4) Depreciation recorded on factory equipment, $60,000.
5) Other manufacturing overhead costs accrued during May, $50,000.
6) The company applies manufacturing overhead cost to production using a predetermined rate of $30 per direct labor hour. A total of 5,000 direct labor hours were used in May.
7) Jobs costing $500,000 according to their job cost sheets were completed during May and transferred to Finished Goods.
8) Jobs that had cost $400,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 130% of manufacturing cost.
a. Prepare journal entries to record the transactions provided above.
b. Determine the amount of overapplied MOH or underapplied MOH.
c. Prepare the journal entry to eliminate any overapplied MOH or underapplied MOH, using the direct write-off method.

Question

Quizplus · Accepted Answer

The Answer of Regington Computers uses a job-order costing system. The following transactions occurred during May. While interning at Regington Computers, Nicki Olson was asked to prepare journal entries, in good form, for the following transactions:
1) Raw materials purchased on account, $200,000.
2) Raw materials used in production, $180,000 ($170,000 direct materials and $10,000 indirect materials).
3) Direct labor cost of $70,000 and indirect labor cost of $20,000.
4) Depreciation recorded on factory equipment, $60,000.
5) Other manufacturing overhead costs accrued during May, $50,000.
6) The company applies manufacturing overhead cost to production using a predetermined rate of $30 per direct labor hour. A total of 5,000 direct labor hours were used in May.
7) Jobs costing $500,000 according to their job cost sheets were completed during May and transferred to Finished Goods.
8) Jobs that had cost $400,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 130% of manufacturing cost.
a. Prepare journal entries to record the transactions provided above.
b. Determine the amount of overapplied MOH or underapplied MOH.
c. Prepare the journal entry to eliminate any overapplied MOH or underapplied MOH, using the direct write-off method.

Regington Computers Uses a Job-Order Costing System