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9 May, 20:11

Cline Manufacturing Company uses a job order system and maintains perpetual inventory records.

The columns indicating the appropriate account (s) to be debited and credited for the transactions listed below.

Transactions Account (s) Debited Account (s) Credited

1. Raw materials were purchased on account.

2. Issued a check to Dixon Machine Shop for repair work on factory equipment.

3. Direct materials were requisitioned for Job 280.

4. Factory labor was paid as incurred.

5. Recognized direct labor and indirect labor used.

6. The production department requisitioned indirect materials for use in the factory.

7. Overhead was applied to production based on a predetermined overhead rate of $8 per labor hour.

8. Goods that were completed were transferred to finished goods.

9. Goods costing $80,000 were sold for $105,000 on account.

10. Paid for raw materials purchased previously on account.

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  1. 9 May, 20:18
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    1. Raw materials were purchased on account.

    Debit Raw Materials Inventory.

    Credit Accounts Payable.

    Inventory was bought in credit so Payable is owed.

    2. Issued a check to Dixon Machine Shop for repair work on factory equipment.

    Debit Manufacturing Overhead

    Credit Cash

    Cash was used to pay for Indirect production work. Cash reduces Sonia credited.

    3. Direct materials were requisitioned for Job 280.

    Debit Work in Progress Inventory

    Credit Raw Material Inventory

    Transferred from Raw Materials so work may be done.

    4. Factory labor was paid as incurred.

    Debit Factory Labor

    Credit Cash

    Cash reduces again so is credited. Factory Labor is Expense that should be debited.

    5. Recognized direct labor and indirect labor used.

    Debit Work in Progress Inventory

    Debit Manufacturing Overhead

    Credit Factory Labor

    Direct Labor falls under Work in Progress and Indirect Labor falls under Manufacturing Overhead.

    6. The production department requisitioned indirect materials for use in the factory.

    Debit Manufacturing Overhead

    Credit Raw Materials Inventory

    Indirect materials are an overhead.

    7. Overhead was applied to production based on a predetermined overhead rate of $8 per labor hour.

    Debit Work in Progress Inventory

    Credit Manufacturing Overhead

    8. Goods that were completed were transferred to finished goods.

    Debit Finished Goods

    Credit Work in Progress Inventory

    9. Goods costing $80,000 were sold for $105,000 on account.

    Debit Cost of Goods Sold

    Credit Inventory

    Then,

    Debit Accounts Receivable

    Credit Sales

    10. Paid for raw materials purchased previously on account.

    Debit Accounts Payable

    Credit Cash
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