Reference no: EM132836756

Question - ABC Corporation is a manufacturer that uses job-order costing. On January 1, the beginning of its fiscal year, the company's inventory balances were as follows:

Raw materials $20,000

Work in process $15,000

Finished goods $30,000

The company applies overhead cost to jobs on the basis of machine-hours worked. For the current year, the company's predetermined overhead rate was based on a cost formula that estimated $450,000 of total manufacturing overhead for an estimated activity level of 75,000 machine hours.

The following transactions were recorded for the year:

a. Raw materials were purchased on account, $410,000.

b. Raw materials were requisitioned for use in production, $380,000 ($360,000 direct materials and $20,000 indirect materials).

c. The following costs were accrued for employee services: direct labor, $75,000; indirect labor, $110,000; sales commissions, $90,000; and administrative salaries, $200,000.

d. Sales travel costs were $17,000.

e. Utility costs in the factory were $43,000.

f. Advertising costs were $180,000.

g. Depreciation was recorded for the year, $350,000 (80% relates to factory operations, and 20% relates to selling and administrative activities).

h. Insurance expired during the year, $10,000 (70% relates to factory operations, and the remaining 30% relates to selling and administrative activities).

i. Manufacturing overhead was applied to production. Due to greater than expected demand for its products, the company worked 80,000 machine-hours on all jobs during the year.

j. Goods costing $900,000 to manufacture according to their job cost sheets were completed during the year.

k. Goods were sold on account to customers during the year for a total of $1,500,000. The goods cost $870,000 to manufacture according to their job cost sheets.

Required - Make journal entries to record the preceding transactions.