Prescott Company’s predetermined overhead rate is 200% of direct labor. Information on the company’s production activities during September 2013 follows.

a. Purchased raw materials on credit, $ 125,000.

b. Paid $ 84,000 cash for factory wages.

c. Paid $ 11,000 cash for miscellaneous factory overhead costs.

d. Materials requisitions record use of the following materials for the month.

Job 487 . . . . . . . . . . . . . . . . . . . . $ 30,000

Job 488 . . . . . . . . . . . . . . . . . . . . 20,000

Job 489 . . . . . . . . . . . . . . . . . . . . 12,000

Job 490 . . . . . . . . . . . . . . . . . . . . 14,000

Job 491 . . . . . . . . . . . . . . . . . . . . 4,000

Total direct materials . . . . . . . . . 80,000

Indirect materials . . . . . . . . . . . . 12,000

Total materials used . . . . . . . . . . $ 92,000

e. Time tickets record use of the following labor for the month.

Job 487 . . . . . . . . . . . . . . . . . $ 8,000

Job 488 . . . . . . . . . . . . . . . . . 7,000

Job 489 . . . . . . . . . . . . . . . . . 25,000

Job 490 . . . . . . . . . . . . . . . . . 26,000

Job 491 . . . . . . . . . . . . . . . . . 2,000

Total direct labor . . . . . . . . . 68,000

Indirect labor . . . . . . . . . . . . 16,000

Total . . . . . . . . . . . . . . . . . . $ 84,000

f. Allocated overhead to Jobs 487, 489, and 490.

g. Transferred Jobs 487, 489, and 490 to Finished Goods.

h. Sold Jobs 487 and 489 on credit for a total price of $ 340,000.

i. The company incurred the following overhead costs during the month (credit Prepaid Insurance for expired factory insurance).

Depreciation of factory building . . . . . . . . . . . $ 37,000

Depreciation of factory equipment . . . . . . . . 21,000

Expired factory insurance . . . . . . . . . . . . . . . . 7,000

Accrued property taxes payable . . . . . . . . . . . 31,000

j. Applied overhead at month- end to the Goods in Process (Jobs 488 and 491) using the predetermined overhead rate of 200% of direct labor cost.

Required

1. Prepare a job cost sheet for each job worked on in the month. Use the following simplified form.

Job No. __________

Materials . . . . . . . . . $ __________

Labor . . . . . . . . . . . . __________

Overhead . . . . . . . . __________

Total cost . . . . . . . . $__________

2. Prepare journal entries to record the events and transactions a through j.

3. Set up T-accounts for each of the following general ledger accounts, each of which started the month with a zero balance: Raw Materials Inventory, Goods in Process Inventory, Finished Goods Inventory, Factory Payroll, Factory Overhead, Cost of Goods Sold. Then post the journal entries to these T-accounts and determine the balance of each account.

4. Prepare a report showing the total cost of each job in process and prove that the sum of their costs equals the Goods in Process Inventory account balance. Prepare similar reports for Finished Goods Inventory and Cost of Goods Sold.