The Collins Company Uses a Job-Order Costing System and Applies $\quad$

question 93

Essay

The Collins Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of materials used in production.At the beginning of the most recent year,the following estimates were made as a basis for computing the predetermined overhead rate for the year:
Manufacturing overhead cost: $\quad$ $\quad$$\$ 200,000$
Direct materials cost: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\$ 160,000$
The following transactions took place during the year (all purchases and services were acquired on account):
a.) Raw materials purchased: $86,000.
b.) Raw materials requisitioned for use in production (all direct materials): $98,000.
c.) Utility costs incurred in the factory: $15,000.
d.) Salaries and wages incurred as follows:
$\begin{array}{l}\begin{array}{lll} \text { Direct materials} \\ \text { Indirect labour: } \\\text { Selling and administrative salaries: } \\\end{array}\begin{array}{lll}\$ 175,000 \\\$ 70,000 \\\$ 125,000\end{array}\end{array}$
e.) Maintenance costs incurred in the factory: $15,000.
f.) Advertising costs incurred: $89,000.
g.) Depreciation recorded for the year: $80,000, of which 80% relates to factory assets and the remainder relates to selling and administrative assets.
h.) Rental cost incurred on buildings: $70,000 (75% of the space is occupied by the factory, and 25% is occupied by sales and administration).
i.) Miscellaneous selling and administrative costs incurred: $11,000.
j.) Manufacturing overhead cost was applied to jobs as per company policy.
k.) Cost of goods manufactured for the year: $500,000.
l.) Sales for the year (all on account): $1,000,000. These goods cost $600,000 to manufacture.
Required:
Prepare journal entries to record the information above. Key your entries by the letters a through l.

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Definitions:

Acknowledging A Debt

An act by which a debtor recognizes their debt and reaffirms their obligation to pay it, often to prevent the statute of limitations from expiring.

Negotiability

The characteristic of a document (such as a check or note) signifying that it can be transferred from one person to another in a manner that the recipient takes it free of most defenses that could be raised by the original maker or drawer.

Agent's Signature

The signature of a person who is authorized to act on behalf of another, indicating consent or agreement in a contractual context.

Maker

In the context of contracts, the party who creates or signs a promissory note to pay a certain amount of money to another party.