The Polaris Company uses a job-Exercise 3-5 Journal Entries and T-accounts [LO3-1, LO3-2] The Polaris Company uses a job-order costing system. The following transactions occurred in October:order costing system. The following transactions occurred in October: a. Raw materials purchased on account, $210,000.
b. Raw materials used in production, $189,000 ($151,200 direct materials and $37,800 indirect materials).
c. Accrued direct labor cost of $49,000 and indirect labor cost of $20,000.
d. Depreciation recorded on factory equipment, $106,000.
e. Other manufacturing overhead costs accrued during October, $130,000.
f. The company applies manufacturing overhead cost to production using a predetermined rate of $8 per machine-hour. A total of 76,400 machine-hours were used in October.
g. Jobs costing $511,000 according to their job cost sheets were completed during October and transferred to Finished Goods.
h. Jobs that had cost $452,000 to complete according to their job cost sheets were shipped to customers during the month. These jobs were sold on account at 34% above cost.

Required:
a. Prepare journal entries to record the transactions given above.
b. Prepare T-accounts for Manufacturing Overhead and Work in Process. Post the relevant transactions from above to each account. Compute the ending balance in each account, assuming that Work in Process has a beginning balance of $36,000.

Required a

a.

Raw Materials $210,000 (debit)

Account Payable $210,000 (credit)

b.

Work In Process : Direct Materials $151,200 (debit)

Work In Process : Indirect Materials $37,800 (credit)

Raw Materials $189,000  (credit)

c.

Work In Process : Direct Labor $49,000 (debit)

Work In Process : Indirect Labor $20,000 (credit)

Salaries Payable $69,000  (credit)

d.

Work In Process : Depreciation $106,000 (debit)

Accumulated Depreciation $106,000(credit)

e.

Manufacturing Overheads $130,000 (debit)

Accounts Payable $130,000 (credit)

f.

Work In Process $611,200 (debit)

Manufacturing Overheads $611,200 (credit)

g.

Finished Goods Inventory $511,000 (debit)

Work In Process $511,000 (credit)

h.

Accounts Receivable $605,680 (debit)

Cost of Goods Sold $452,000 (debit)

Sales Revenue $605,680 (credit)

Finished Goods Inventory $452,000 (credit)

Required b.

Manufacturing Overhead T- Account

Debit :

Indirect Materials      $37,800

Indirect Labor           $20,000

Depreciation            $106,000

Accounts Payable   $130,000

Over-Applied           $317,400

Totals                        $611,200

Credit :

Work In Process      $611,200

Totals                        $611,200

Totals

Work in Process T- Account

Debit :

Opening Balance                                    $36,000

Direct Materials                                      $151,200

Direct Labor                                            $49,000

Manufacturing Overheads                     $611,200

Totals                                                     $847,400

Credit :

Finished Goods Inventory                    $511,000

Closing Balance                                   $336,400

Totals                                                     $847,400

Explanation:

Manufacturing Cost Accumulate in the Work In Process Account.

When Goods are completed the cost is De-recognized from Work In Process Account to Finished Goods Inventory Account.

It is from this Finished Goods Inventory Account that Cost of Sales for Goods Sold are determined.

the third answer is correct.