Thompson Industries uses a job-order costing system and a predetermined overhead rate based on direct labour cost. Estimated overhead for 2000 was $540,000 and estimated direct labour costs were $900,000. On January 1, 2000, the company had the following inventories: Raw materials Work in process (Job No. 96)....... Finished goods..... The following information pertains to the company's activities for the month of January 2000: a. Purchased $150,000 of materials on account. $-0- 16,000 -0- b. Job Nos. 97 and 98 were started during the month. c. Materials requisitioned for production totalled $144,000, of which $6,000 was for indirect materials. Job No. 96 Job No. 97 Job No. 98 Job No. 96 Job No. 97 Job No. 98 $46,000 70,000 22,000 d. Factory payroll for the month totalled $100,000, of which $15,000 was for indirect labour. The direct labour was distributed as follows: $20,000 35,000 30,000 e. The company made adjusting entries at the end of January to record the following expenses: Amortization. $5,000 1,000 Expired insurance.... f. Other manufacturing costs not yet paid totalled $30,650. g. Overhead was applied using the predetermined overhead rate based upon direct labour cost. h. Job Nos. 96 and 97 were completed during the month. i. Job No. 96 was sold on account during the month at a selling price of 120% of manufacturing cost. Instructions: 1. Prepare journal entries to record the manufacturing activities of the company for January and post to job-cost sheets, where appropriate. (appendix)
