Q18E - Horngren'S Financial And Managerial Accounting

Question

Goldenrod Company makes artificial flowers and reports the following data for the month:

Purchases of materials, on account	$51,000
Materials requisition:
Direct material	42,300
Indirect materials	500
Labor incurred (not yet paid):
Direct labor	20,300
Indirect labor	1,340

Journalize the entries relating to materials and labor.

Step-by-Step Solution

Answer

Date	Particulars	Debit ($)	Credit ($)
1	Work-in-process inventory (direct material)	42,300
	Manufacturing overhead (indirect material)	500
	Raw material inventory		42,800
2	Work-in-process inventory (direct labor)	20,300
	Manufacturing overhead (indirect labor)	1,340
	Wages payable		21,640

Step 1: Manufacturing overhead

Manufacturing overhead includes all the indirect cost incurred by the company while manufacturing the product of the company.

Step 2: Recording of direct or indirect material of labor.

The direct material or labor are debited as the work in process inventory and the indirect material or labor are debited as the manufacturing overhead.And, for the material cost, raw material inventory should be credited. And for the labor cost, wages payable should be credited.