Prepare journal entries to record the transactions for the

Reference no: EM13597681

Sovereign Millwork, Ltd., produces reproductions of antique residential moldings at a plant located in Manchester, England. Because there are hundreds of products, some of which are made only to order, the company uses a job-order costing system. On July 1, the start of the company's fiscal year, inventory account balances were as follows:

Raw materials £ 11,000
Work in process £ 4,400
Finished goods £ 8,900

The company applies overhead cost to jobs on the basis of machine-hours. Its predetermined overhead rate for the fiscal year starting July 1 was based on a cost formula that estimated £108,000 of manufacturing overhead for an estimated activity level of 45,000 machine-hours. During the year, the following transactions were completed:

a. Raw materials purchased on account, £170,000.
b.Raw materials requisitioned for use in production, £148,000 (materials costing £129,000 were chargeable directly to jobs; the remaining materials were indirect).
c. Costs for employee services were incurred as follows:

Direct labor £ 96,000
Indirect labor £ 39,100
Sales commissions £ 25,000
Administrative salaries £ 42,000

d.Prepaid insurance expired during the year, £18,800 (£13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities).

e. Utility costs incurred in the factory, £15,000.

f. Advertising costs incurred, £11,000.

g.Depreciation recorded on equipment, £20,000. (£16,000 of this amount was on equipment used in factory operations; the remaining £4,000 was on equipment used in selling and administrative activities.)

h.Manufacturing overhead cost was applied to jobs, £? (The company recorded 37,000 machine-hours of operating time during the year.)

i. Goods that had cost £289,000 to manufacture according to their job cost sheets were completed.

j.Sales (all on account) to customers during the year totaled £504,000. These goods had cost £289,000 to manufacture according to their job cost sheets.

1.Prepare journal entries to record the transactions for the year. (Round your intermediate calculations to 2 decimal places. Omit the "£" sign in your response.)

Reference no: EM13597681

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