Inception Company produces gadgets for the coveted small appliance market. The following data reflect activity for the

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Question:

Inception Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014:

Inception Co. uses a normal-costing system and allocates overhead to work in process at a rate of 3.20 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.

Requirements

1.	Prepare journal entries to record the transactions for 2014 including an entry to close out over- or under allocated overhead to cost of goods sold. For each journal entry indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry.
2.	Post the journal entries to T-accounts for all of theinventories, Cost of Goods Sold, the Manufacturing Overhead Control Account, and the Manufacturing Overhead Allocated Account.

Requirement 1. Prepare journal entries to record the transactions for 2014 including an entry to close out over- or under allocated overhead to cost of goods sold. For each journal entry indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry. (Record debits first, then credits. Exclude explanations from any journal entries.)

Record the purchase of direct materials, $125,000.

Journal Entry

Accounts

Debit

Credit

(1.)

TABLE

Costs incurred:
Purchases of direct materials (net) on credit	$125,000
Direct manufacturing labor cost	86,000
Indirect labor	54,900
Depreciation, factory equipment	30,000
Depreciation, office equipment	7,700
Maintenance, factory equipment	26,000
Miscellaneous factory overhead	9,200
Rent, factory building	74,000
Advertising expense	95,000
Sales commissions	33,000