1. Given the following information for Great Corporation, prepare the necessary journal entries,
assuming that the Raw Material Inventory account contains both direct and indirect material.
A. Purchased raw material on account P28,500
B. Put material into production: P15,000 of direct material and P3,000 of indirect material.
C. Accrued payroll of P90,000, of which 70 percent was direct and the remainder was indirect.
D. Incurred and paid other overhead items of P36,000
E. Transferred items costing P86,500 to finished goods.
F. Sold goods costing P71,300 on account for P124,700.
2. Prepare a Schedule of Cost of Goods Manufactured (in good form) for the Cheerful Company from
the following information for June 20X8:
Inventories
Raw Material
Work in Process
Finished Goods
Beginning
P 6,700
17,700
29,730
Ending
P 8,900
22,650
19,990
Additional information: purchases of raw material were P46,700; 19,700 direct labor hours were
worked at P11.30 per hour; overhead costs were P33,300.
Solution for #1:
A.
B.
C.
D.
E.
F.
Raw Material Inventory
Accounts Payable
To record purchase of raw materials on account
28,500
Work in Process Inventory
Variable Overhead Control
Raw Material Inventory
To record transfer of materials into production
15,000
3,000
Work in Process Inventory
Variable Overhead Control
Salaries and Wages Payable
To record accrual of payroll
63,000
27,000
Variable Overhead Control
Cash
To record payment of overhead items
36,000
Finished Goods Inventory
Work in Process Inventory
To record cost of goods manufactured
86,500
Accounts Receivable
Sales
To record sale of goods on account
124,700
124,700
Cost of Goods Sold
Finished Goods Inventory
To record cost of goods sold for the period
71,300
28,500
18,000
90,000
36,000
86,500
71,300
Solution for #2:
Cheerful Company
Schedule of Cost of Goods Manufactured
For the Month Ended June 30, 20X8
Work in Process Inventory, beg.
Manufacturing costs for the period:
Raw Material Inventory:
Beginning Balance
Purchases of material
Raw Material available for use
Ending balance
Direct Material used
Direct Labor
Overhead
Total current period manufacturing costs
Total cost to account for
Work in Process Inventory, end.
Cost of Goods Manufactured
P 17,700
P 6,700
46,700
P53,400
( 8,900)
P 44,500
222,610
33,300
300,410
P318,110
( 22,650)
P295,460