Transaction and Adjustment Data for Ortiz Company for the Calendar

question 134

Essay

Transaction and adjustment data for Ortiz Company for the calendar year end is as follows:
1. December 24 (initial salary entry): $15000 of salaries earned between December 1 and December 24 are paid.
2. December 31 (adjusting entry): Salaries earned between December 25 and December 31 are $4500. These will be paid in the January 8 payroll.
3. January 8 (subsequent salary entry): Total salary payroll amounting to $7000 was paid.
Instructions
Prepare two sets of journal entries as specified below. The first set of journal entries should assume that the company does not use reversing entries and the second set should assume that reversing entries are utilized by the company.

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Definitions:

Material Variance

Material variance is the difference between the actual cost of materials used in the production process and the expected (or standard) cost, used to analyze and control costs in manufacturing.

Standard Cost

Standard cost is an estimated or predetermined cost of performing an operation, producing a good, or delivering a service, under normal conditions, used for budgeting and assessing performance.

Materials Price Variance

The difference between the actual cost and the standard cost of materials multiplied by the quantity purchased.

Raw Materials

Basic materials and substances used in the initial stages of production to create goods and products.