The Lee’s Company uses a job-order costing system and a predetermined overhead rate based on machine hours. Estimated manufacturing overhead for the upcoming year was $1,000,000, and estimated machine hours were 25,000. On March 1, the company had only one job in work in process (Job No. 126) with total costs of $15,000. The following information pertains to the company’s activities for the month of March: 1. Raw materials were purchased on account for $75,000. 2. Jobs 127 and 128 were started during the month. 3. Raw materials totalling $70,000 were requisitioned for use in production. Of this total, $8,000 was for indirect materials. The direct materials were distributed as follows: Job No. 126 $16,000 Job No. 127 $32,000 Job No. 128 $14,000 4. Factory labor costs for the month totalled $160,000, of which $27,000 was for indirect labor. The direct labor was distributed as follows: Job No. 126 $33,000 Job No. 127 $75,000 Job No. 128 $25,000 5. The company had depreciation of $13,000 and expired insurance on the factory of $7,000 for the month of March. 6. Other manufacturing costs (excluding direct materials and direct labour) incurred but not paid totalled $27,000. 7. Manufacturing overhead was applied using the predetermined overhead rate. The following is the distribution of machine hours (MH) for March: Job No. 126 550 MH Job No. 127 800 MH Job No. 128 650 MH 8. Job No. 126 and Job No. 127 were completed during the month. 9. Job No. 126 was sold on account during March at a selling price of $154,800. Beginning balance as of March 1 were as follows: Materials $ 6,500 Work in process (Job No.126) 15,000 Finished goods 7,000

Required: a. Prepare journal entries to record the following activities of the company for March. Assume the company uses perpetual inventory system. i. The accumulation of raw materials costs and manufacturing overhead costs. (Item 1,5 & 6 from above) ii. The assignment of raw materials, factory labor costs to production. (Item 3 & 4) iii. The assignment of manufacturing overhead costs to production using the predetermined overhead rate based on machine hours. (Item 7) iv. The completion of Job No. 126 and Job No. 127. v. The sale of Job No. 126 on account.

b. Prepare the journal entry to adjust for the underapplied or overapplied overhead. Assume the amount is considered immaterial.

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The Lees Company Estimated Mfg OH for the upcoming year 1000000 Estimated Machine Hours 25000 Predetermined Overhead Rate per Machine Hour100000025000 4000 Ans a Journal Entries in the Book of The Lee... View the full answer