Case Study 1
The general ledger of Diamonds in the Rough Ltd, a manufacturing firm
operating a job cost system, included the following balances at May 31:
Raw Materials Control
Factory Overhead Applied
Work in Process
Particulars of jobs in process and the job completed were:
During the month of June, the following transactions occurred:
Materials purchased on credit
Factory wages paid
- PAYG Tax
Factory rent paid
Invoices for sundry factory overhead items
Depreciation at 15% per annum is to be charged on factory plant valued at $160,000.
Material issued to the factory and labour charged for the month were:
Factory overhead is applied using a rate of 120% of direct labour cost. Any over/under-applied overhead is transferred to cost of goods sold at June 30. At 30 June, Job No. 326 was incomplete. Job Nos 322, 323 and 324 had been completed and sold on credit, while Job No. 325 was still in the finished goods warehouse. The jobs sold had a total sales value of $81,744.
Prepare and balance the following accounts (a single ledger is used):
a. Raw Materials Control
b. Labour Control
c. Factory Overhead Control
d. Factory Overhead Applied
e. Work in Process
f. Finished Goods
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