Reference no: EM132573727

Question 1: Prepare the necessary journal entries for the May Company for the month of January. There are many jobs in progress, you are only accounting for 2 of them. There are other entries that have been done. You are only responsible for these entries. May uses a normal job order cost accounting system, and the materials inventory on January 1 was zero.

a. Raw materials purchases on account for January were $52,500.

b. Direct materials of $9500 were requisitioned for Job #2 and $8500 for Job #3. Indirect materials drawn were $4500.

c. Factory payroll for the month was $154,000. The following rates applied: federal income tax withholding 12%; provincial income tax withholding 7%; CPP 7.65%, pension plan 2%, Affirmative Action Fee 1% .

d. Quatro's payroll tax burden and fringe benefits rates are: CPP 7.65%, Employment Equity Contribution 6.2%; vacation pay (2 weeks when 50 weeks are worked); pension 5%; and health insurance 3%.

e. Direct labor costs for Job #2 and Job #3 were $20,000 and $15,000, respectively. Indirect labor costs related to these two jobs were $19,000.

f. Actual overhead costs paid on account were $111,000, and depreciation on factory equipment totaled $140,000.

g. Overhead was applied at a rate of 225 percent of direct labor cost.

h. Job #2 was completed and transferred to finished goods. The balance in Job #2 on January 1 was $13,000. This was the only job completed in January.

i. Job #2 was sold.