Old school publishing inc. began printing operations on january 1. jobs 301 and 302 were completed during the month, and all costs applicable to them were recorded on the related cost sheets. jobs 303 and 304 are still in process at the end of the month, and all applicable costs except factory overhead have been recorded on the related cost sheets. in addition to the materials and labor charged directly to the jobs, $1,030 of indirect materials and $12,430 of indirect labor were used during the month. the cost sheets for the four jobs entering production during the month are as follows, in summary form:

Journalize the Jan. 31 summary entries to record each of the following operations for January (one entry for each operation). Refer to the Chart of Accounts for exact wording of account titles.

A. Direct and indirect materials used.

B. Direct and indirect labor used.

C. Factory overhead applied to all four jobs (a single overhead rate is used based on direct labor cost).

D. Completion of Jobs 301 and 302.

Solution:

S No. Particulars Debit ($) Credit ($)

A. Work in process 68900

Material inventory 68900

(10900+18300+26000+13700)

(Direct materials used)

Factory overhead 1030

Material inventory 1030

(Indirect materials used)

B. Work in process 54900

Wages payable 54900

(8900+17700+16000+12300)

(Direct labor used)

Manufacturing overhead 12430

Wages payable 12430

(Indirect labor used)

C. Work-in-process 35685

Manufacturing overhead 35685

(Note:1)

(Factory overhead applied)

D. Finished goods 73090

Work-in-process 73090

(Total cost of Job 301 & 302)

(25585+47505)

(Completion of Jobs 301&302)

Notes:

1 Consider Job 301

Direct labor=8900

Factory overhead=5785

Factory overhead as a % of direct labor =(5785/8900)*100 = 65%

Total direct labor cost for all four jobs= 54900

Factory overhead=54900*65%

=35685