Following are transactions for Itabuna Manufacturing Company. Assume that the company has no beginning work in process inventory or finished goods inventory.
a. Itabuna purchased $575,000 of raw materials, paying 12% down, with the remainder to be paid in 10 days.
b. The production manager requisitioned $280,000 of materials (85% for direct use and the remainder for indirect purposes).
c. The liability incurred in (a) was paid in full.
d. 25,000 hours of direct labor and 2,750 hours of indirect labor were incurred. (Assume an average hourly wage rate of $9 for both direct and indirect labor.)
e. The following salaries were paid:
Factory supervisor (a product cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $75,000
Administrative executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,000
Sales personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000
f. Rent and utilities for the building of $33,000 and $9,000, respectively, were paid. Three fourths of these expenses are applicable to manufacturing and the remainder to administration.
g. Depreciation on factory equipment was $17,000.
h. Advertising costs for the year totaled $16,000.
i. Manufacturing overhead is applied at a rate of $6.84 per direct labor hour.
j. All but $35,000 of Work in Process Inventory was completed and transferred to Finished Goods Inventory.
k. The sales price of finished goods that were sold was 130% of manufacturing costs. Assume a perpetual inventory system and that all finished goods were sold.
l. Close over or under applied overhead directly to cost of goods sold.
Required:
Prepare journal entries for the transactions.
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