Prepare summary journal entries to record the following transactions for a company in its first month of operations.

a. Raw materials purchased on account, $94,000.

b. Direct materials used in production, $40,500.

c. Indirect materials used in production, $25,000.

d. Paid cash for factory payroll, $70,000.

e. Of this total, $50,000 is for direct labor and $20,000 is for indirect labor.

f. Paid cash for other actual overhead costs, $7,875.

g. Applied overhead at the rate of 125% of direct labor cost.

h. Transferred cost of jobs completed to finished goods, $74,000.

i. Sold jobs on account for $105,000. The jobs had a cost of $74,000.

Description Dr Cr

a. Raw Materials $94000

Account payable $ 94000

b. Work In Process $ 40500

Direct Materials $40500

c. Work In Process $ 25000

Indirect Materials $25000

d. Payroll (Liabilities) $ 70000

Cash / Bank $ 70000

e. Direct Labor $ 50000

Indirect labor $ 20000

Payroll (Liabilities) $ 70000

f. Overhead $ 7875

Cash/bank $ 7875

g. Work in process $ 62500

Applied overhead (125 % $62500

of direct cost)

h. Finished goods $74000

Work in Process $ 74000

i. Account Receivable $ 105000

Sale/Revenue $105000

Cost of Goods sold $ 74000

Finished Goods $ 74000

Explanation:

Summary of Journal entries are given below:

a. Raw materials purchased on account, $94,000.

Description Dr Cr

Raw Materials $94000

Account payable $ 94000

b. Direct materials used in production, $40,500.

Work In Process $ 40500

Direct Materials $40500

c. Indirect materials used in production, $25,000.

Work In Process $ 25000

d. Paid cash for factory payroll, $70,000.

Payroll (Liabilities) $ 70000

Cash / Bank $ 70000

e. Of this total, $50,000 is for direct labor and $20,000 is for indirect labor.

Direct Labor $ 50000

Indirect labor $ 20000

Payroll (Liabilities) $ 70000

f. Paid cash for other actual overhead costs, $7,875.

Overhead $ 7875

g. Applied overhead at the rate of 125% of direct labor cost.

Work in process $ 62500

Applied overhead (125 % $62500

of direct cost)

h. Transferred cost of jobs completed to finished goods, $74,000.

Finished goods $74000

Work in Process $ 74000

i. Sold jobs on account for $105,000. The jobs had a cost of $74,000.

Account Receivable $ 105000

Sale/Revenue $105000

Cost of Goods sold $ 74000

Finished Goods $ 74000