Prepare the journal entries to record the sale of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit
(1)
(To record sale of jobs)
(2)
(To record cost of jobs)
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What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of?
Finished Goods Inventory $
Job No. 50 Job No. 51 Job No. 52 Jobs 50 and 51 Jobs 51 and 52 Jobs 50 and 52
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What is the amount of over- or underapplied overhead?
Manufacturing Overhead $
Overapplied Underapplied

Complete Question:

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2017, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows:

direct materials $ 22,000 ,

direct labor $ 13,200

manufacturing overhead $ 17,600

As of January 1, Job No. 49 had been completed at a cost of $ 99,000 and was part of finished goods inventory. There was a $ 16,500 balance in the Raw Materials Inventory account.

During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $ 134,200 and $ 173,800 , respectively. The following additional events occurred during the month.

1. Purchased additional raw materials of $ 99,000 on account.

2. Incurred factory labor costs of $ 77,000 . Of this amount $ 17,600 related to employer payroll taxes.

3. Incurred manufacturing overhead costs as follows: indirect materials $ 18,700 ; indirect labor $ 22,000 ; depreciation expense on equipment $ 13,200 ; and various other manufacturing overhead costs on account $ 17,600 .

4. Assigned direct materials and direct labor to jobs as follows.

Job No.         Direct           Direct

                Materials           Labor

50  $ 11,000  $ 5,500

51   42,900   27,500

52   33,000   22,000

Lott Company

1. Journal Entries to record the sale of Job 49 and Job 50:

Debit Cost of Goods Sold $175,450

Credit Finished Goods

Job 49 $99,000

Job 50 $76,450

To record the cost of Jobs 49 and 50 sold during the period.

Debit Accounts Receivable:

Job 49 $134,200

Job 50 $173,800

Credit Sales Revenue $308,000

To record the sale of Jobs 49 and 50 during the period.

2. The balance in the Finished Goods Inventory account at the end of the month is:

= $106,150.

This balance consists of Job 51 only.

3. There is no provision of estimated manufacturing overhead.  Therefore, there is no overapplied or underapplied overhead in this situation.  The manufacturing overhead costs were applied based on the actual costs incurred.

Explanation:

a) Data and Calculations:

Cost of Work-in-Process or Production:

Job No.         Direct           Direct        WIP            Overhead      

                Materials           Labor    Beginning        Costs       Closing

50  $ 11,000  $ 5,500     $52,800        $7,150    $76,450

51   42,900   27,500             0           35,750      106,150

52   33,000   22,000            0           28,600       83,600

January 1, Job 50 Cost of WIP:

direct materials                 $ 22,000

direct labor                            13,200

manufacturing overhead     17,600

Beginning WIP of Job 50 $52,800

Manufacturing overhead costs:

indirect materials            $ 18,700

indirect labor                 $ 22,000

depreciation expense

  on equipment             $ 13,200

other overhead costs   $ 17,600

Total overhead costs =  $71,500

Allocation of manufacturing overhead costs:

Jobs        Direct Labor   Overhead Allocation

50  $ 5,500             $7,150 ($5,500 * $1.30)

51   27,500          $35,750 ($27,500 * $1.30)      

52  22,000          $28,600 ($22,000 * $1.30)

Total    $ 55,000         $71,500

a.