Stine Company uses a job order cost system. On May 1, the company has a balance in Work in Process Inventory of $3,500 and two jobs in process: Job No. 429 $2,000, and Job No. 430 $1,500. During May, a summary of source documents reveals the following. Job Number Materials Requisition Slips Labor Time Tickets
429 $2,500 $1,900
430 3,500 3,000
431 4,400 $10,400 7,600 $12,500
General use 800 1,200
$11,200 $13,700
Stine Company applies manufacturing overhead to jobs at an overhead rate of 60% of direct labor cost. Job No. 429 is completed during the month.
1. Prepare summary journal entries to record (1) the requisition slips, (2) the time tickets, (3) the assignment of manufacturing overhead to jobs, and (4) the completion of Job No. 429.
2. Post the entries to Work in Process Inventory, and prove the agreement of the control account with the job cost sheets.

Stine Company

1. Summary Journal Entries:

Debit Work in Process $10,400

Credit Materials  $10,400

To record materials requisitioned for production.

Debit Work in Process $12,500

Credit Direct Labor $12,500

To record direct labor time tickets.

Debit Work in Process $7,500

Credit Manufacturing overhead $7,500

To record manufacturing overhead applied to production.

Debit Finished goods inventory $7,540

Credit Work in Process $7,540

To record the transfer of Job No. 429 to finished goods inventory.

2. Work in Process Inventory Control

Account Titles             Debit    Credit

Beginning balance    $3,500

Direct materials         10,400

Direct labor               12,500

Overhead                   7,500

Finished Goods Inventory     $7,540

Ending Balance                     26,360

Job Sheets                              Job 429       Job 430      Job 431     Total

Beginning WIP                         $2,000          $1,500                        $3,500

Direct materials                         2,500           3,500       $4,400      10,400

Direct labor                                 1,900           3,000         7,600      12,500

Manufacturing overhead (60%) 1,140             1,800        4,560        7,500

Finished Goods Inventory     $7,540                                               (7,540)

Work in Process                                           $9,800    $16,560  $26,360

Explanation:

a) Data and Computations:

Balance in Work in Process Inventory = $3,500

Job No. 429 $2,000

Job No. 430  $1,500

Job                  Materials              Labor Time

Number   Requisition Slips               Tickets

429                  $2,500                      $1,900

430                    3,500                        3,000

431                     4,400 $10,400          7,600 $12,500

General use                        800                         1,200

Total                              $11,200                     $13,700

Total manufacturing overhead:

Indirect materials  $800

Indirect labor      $1,200

Total                  $2,000

answer; is usually (less than) the socially optimal level of consumption;

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