Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 18

Assigning Costs to Jobs
The following transactions occurred in April at Pawnee Workshops, a custom manufacturer of furniture:
1. Purchased $8,000 of materials.
2. Issued $400 of supplies from the materials inventory.
3. Purchased $5,600 of materials.
4. Paid for the materials purchased in transaction (1).
5. Issued $6,800 in direct materials to the production department.
6. Incurred direct labor costs of $10,000, which were credited to Wages Payable.
7. Paid $10,600 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.
8. Applied overhead on the basis of 125 percent of $10,000 direct labor costs.
9. Recognized depreciation on manufacturing property, plant, and equipment of $5,000.
The following balances appeared in the accounts of Pawnee Workshops for April:

Required
a. Prepare journal entries to record the transactions.
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.