This textbook is available at
Chapter 26, End of Chapter, Self-Study Demonstration Problem, Exercise 1

# Mantel Manufacturing Company uses a job order cost accounting system. The following is a summary of transactions completed during its first year of operations:a. Purchased materials on account, \$435,000.b. (1) Issued direct materials to production. Job No. 1\$55,000Job No. 4\$119,000Job No. 2  76,000Job No. 5    65,000Job No. 3  59,800Job No. 6    18,000(2) Issued indirect materials to production, \$11,900.c. (1) Incurred factory labor costs. Job No. 1\$34,000Job No. 4\$76,000Job No. 2  40,000Job No. 5   38,000Job No. 3  29,800Job No. 6   12,000(2) Incurred indirect labor costs, \$10,000.d. Incurred other factory overhead costs, \$96,000.e. Depreciation expense on factory equipment, \$29,000.f. Applied factory overhead, 65% of direct labor cost incurred on jobs.g. Finished Job Nos. 1 to 2, 4 to 5 as products A, B, D, and E, respectively.h. Shipped products A, B, and D and billed customers for \$158,000, \$210,000, and \$362,000, respectively.Prepare general journal entries for the foregoing transactions. Make compound entries for (b), (c), and (f), but with separate debits for each job.

### Explanation

a - Bought materials on account. Material is debited by \$435,000 and accounts payable is credited by \$435,000.

b (1) -  Direct material issued to production for jobs 1 - 6. Work in process is debited by \$55,000 , \$76,000 , \$59,800 , \$119,000 , \$65,000 and \$18,000 for jobs 1 - 6 respectively. Material is credited by \$392,800.

b (2) - Indirect material issued to production. Factory overhead is debited by \$11,900 and materials is credited by \$11,900.

c (1) - Direct labor is incurred for jobs 1 - 6. Work in process is debited by \$34,000 , \$40,000 , \$29,000 , \$76,000 , \$38,000 and \$12,000 for jobs 1 - 6 respectively. Wages payable is credited by \$229,000.

c (2) - Indirect labor is incurred. Factory overhead is debited by \$10,000 and wages payable are credited by \$10,000.

d - Other factory overhead is incurred. Factory overhead is debited by \$96,000 and accounts payable are credited by \$96,000.

e - Depreciation on factory equipment is charged. Factory overhead is debited by \$29,000 and accumulated depreciation is credited \$29,000.

f - Factory overhead applied to work in process at 65% of Direct labor. Work in process is debited by \$22,100 , \$26,000 , \$18,850 , 49,400 , \$24,700 , \$7,800 respectively for jobs 1 - 6. Factory overhead is credited by \$148,850.

g - Jobs 1,2,4,5 are finished as products A,B,D,E. Finished goods (product A) is debited by \$111,100 and work in process (Job no. 1) is credited by \$111,100.

Finished goods (product B) is debited by \$142,000 and work in process (Job no. 2) is credited by \$142,000.

Finished goods (product D) is debited by \$244,400 and work in process (Job no. 4) is credited by \$244,400.

Finished goods (product E) is debited by \$127,700 and  work in process (Job no. 5) is credited by \$127,700.

h - Shipped product A,B,D.

Accounts Receivable is debited by \$158,000 and sales is credited by \$158,000.

Cost of goods sold is debited by 111,100 and finished goods (product A) is credited by \$111,100.

Accounts Receivable is debited by \$210,000 and sales is credited by \$210,000.

Cost of goods sold is debited by \$142,000 and finished goods (product A) is credited by \$142,000.

Accounts Receivable is debited by \$362,000 and sales is credited by \$362,000.

Cost of goods sold is debited by \$244,400 and finished goods (product A) is credited by \$244,400.