19-5TI
Question
Malone Company has adopted a JIT management system and has the following transactions in August:
a. Purchased raw materials on account, \(50,000.
b. Incurred labor and overhead costs, \)70,000.
c. Completed 500 units with standard costs of \(95 for direct materials and \)150 for conversion costs.
d. Sold on account 475 units for $300 each.
10. Record the journal entries for Malone Company for August.
11. Open a T-account for Conversion Costs
Step-by-Step Solution
VerifiedFinished Goods Inventory: $122,500
Over Allocated Conversion Cost: $5,000
Date | Description | Debit | Credit |
|
|
|
|
a) | Raw and In-process Inventory | $50,000 |
|
| Accounts Payable |
| $50,000 |
| Being inventory purchased |
|
|
|
|
|
|
b) | Conversion Cost | $70,000 |
|
| Overhead payable |
| $70,000 |
| Being labor and overhead cost incurred |
|
|
|
|
|
|
c) | Finished Goods Inventory | $122,500 |
|
| Raw and In-process Inventory |
| $47,500 |
| Conversion Cost |
| $75,000 |
| Being inventory and overhead costs transferred |
|
|
|
|
|
|
d) | Accounts Receivables | $142,500 |
|
| Sales revenue |
| $142,500 |
| Being Sales made on account |
|
|
|
|
|
|
| Cost of goods sold | $116,375 |
|
| Finished Goods Inventory |
| $116,375 |
| Being cost of goods incurred for sale |
|
|
Conversion Cost
Date | Particular | Amount | Date | Particular | Amount |
|
|
|
|
|
|
b) | Overheads payable | $70,000 | c) | Finished Goods inventory | $75,000 |
Aug 31 | Cost of Goods Sold | $5,000 |
|
|
|
Journal Entry for overallocation
Date | Description | Debit | Credit |
|
|
|
|
Aug 31 | Conversion Cost | $5,000 |
|
| Cost of Goods Sold |
| $5,000 |
| Being over allocation adjusted |
|
|