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20 January, 05:18

Starr Company reports the following information for August. Raw materials purchased on account $ 76,200 Direct materials used in production $ 48,000 Factory wages earned (direct labor) $ 15,350 Overhead rate 120 % of direct labor cost Prepare journal entries to record the following events. 1. Raw materials purchased. 2. Direct materials used in production. 3. Direct labor used in production. 4. Applied overhead.

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  1. 20 January, 05:21
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    1. Raw materials purchased.

    Raw Materials Account $ 76,200 (debit)

    Account Payable $ 76,200 (credit)

    2. Direct materials used in production.

    Work In Progress Account $48,000 (debit)

    Raw Materials Account $48,000 (credit)

    3. Direct labor used in production.

    Work In Progress Account $15,350 (debit)

    Wages and Salaries $15,350 (credit)

    4. Applied overhead.

    Work In Progress Account $18,360 (debit)

    Manufacturing Overhead Account $18,360 (credit)

    Explanation:

    1. Raw materials purchased.

    Raw Materials Account $ 76,200 (debit)

    Account Payable $ 76,200 (credit)

    Recognise the Assets of Raw Materials and a Liability - Account Receivable

    2. Direct materials used in production.

    Work In Progress Account $48,000 (debit)

    Raw Materials Account $48,000 (credit)

    De-recognise the Raw Materials used in production and recognise the cost in Work In Progress Account

    3. Direct labor used in production.

    Work In Progress Account $15,350 (debit)

    Wages and Salaries $15,350 (credit)

    Recognise the labor cost in Work In Progress Account and de-recognise the Wages and Salaries Account with the amount applied to production

    4. Applied overhead.

    Work In Progress Account $18,360 (debit)

    Manufacturing Overhead Account $18,360 (credit)

    De-recognise the Manufacturing Overheads used in production and recognise the cost in Work In Progress Account
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