Docksider Boats Uses a Job Order Cost Accounting System

question 56

Multiple Choice

Docksider Boats uses a job order cost accounting system. During one month Docksider purchased $153,000 of raw materials on credit; issued materials to production of $164,000 of which $24,000 were indirect. Docksider incurred a factory payroll of $95,000, paid in cash, of which $25,000 is classified as indirect labor. Docksider uses a predetermined overhead application rate of 170% of direct labor cost. The journal entry to record the allocation of factory payroll to production is:

• A) Debit Goods in Process Inventory $95,000; credit Factory Payroll $95,000.
• B) Debit Goods in Process Inventory $95,000; credit Cash $95,000.
• C) Debit Factory Payroll $95,000; credit Cash $95,000.
• D) Debit Goods in Process Inventory $70,000; debit Factory Overhead $25,000; credit Factory Payroll $95,000.
• E) Debit Goods in Process Inventory $70,000; debit Factory Overhead $25,000; credit Cash $95,000.

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