ACTIVITY 1

ANSWER AND EXPLANATIONS

 Journal Entries and Statement of Cost of Goods Sold
On January 1, the general ledger of Freshmen Company contained the following accounts and
balances:

Cash P 94,000
Accounts Receivable 100,000
Finished Goods 65,000
Work in Process 15,000
Materials 44,000
Machinery 90,600
Accumulated Depreciation- Machinery 20,000
Accounts Payable 118,750
Ordinary Shares 200,000
Retained Earnings 69,850

Details of inventory are:

Finished goods inventory: P65,000
Job 101 Job 102
WIP inventory:
Direct materials: 1,000 units of A @ P5 5,000
400 units of B @ P3 1,200
Direct labor: 1,000 hours @ P4 4,000
400 hours @ P5 2,000
Factory overhead applied at the rate of
2,000 800
P2 per direct labor hour
Total P 11,000 P 4,000

Materials inventory : P44,000

Journal Entries and Statement of Cost of Goods Sold

TRANSACTION:
Materials were purchased on account for P229,040 .

ENTRY:
Materials 229,040
Accounts payable 229,040
Journal Entries and Statement of Cost of Goods Sold

TRANSACTION:
 Payroll totaling P220,000 was accrued.

ENTRY:
Payroll 220,000
Payroll payable 220,000
Journal Entries and Statement of Cost of Goods Sold
TRANSACTION:
 Payroll was distributed as follows:: Jobs 101, 5,000 DLH @ P8;
Job 102, 8,000 hrs. @ P10; Job 103, 6,000 hrs. @ P6. Indirect
labor, P24,000 and selling and admin expense P40,000.

ENTRY:
Work in process 156,000
Factory overhead control 24,000
Selling and administrative expenses 40,000
Payroll 220,000
Journal Entries and Statement of Cost of Goods Sold

Direct labor:
Job 101 (5,000 hours x P8) P 40,000
Job 102 (8,000 hours x P10) 80,000 Job 103
(6,000 hours x P6) 36,000
Total P 156,000
Journal Entries and Statement of Cost of Goods Sold
TRANSACTION:
 Materials were issued as follows: P103,200 to Job 101; P84,000
to Job 102; P29,150 to Job 103. Indirect materials costing
P15,040 were issued.

ENTRY:
Work in process 216,350
Factory overhead control 15,040
Materials 231,390
 
Journal Entries and Statement of Cost of Goods Sold

TRANSACTION:
 Factory overhead was applied to Job 101, 102 1nd 103 at a
rate of P4.50 per direct labor hour.

ENTRY:
Work in process 85,500
Applied factory overhead 85,500
Journal Entries and Statement of Cost of Goods Sold

Application of Manufacturing OH:

Job 101 (5,000 hours x P4.50) P 22,500
Job 102 (8,000 hours x P4.50) 36,000 Job 103
(6,000 hours x P4.50) 27,000
Total P 85,500
OR

19,000hours x P4.50 = P 85,500

Journal Entries and Statement of Cost of Goods Sold
TRANSACTION:
 Jobs 101 and 102 were completed and immediately sold on
account for P250,000 and P270,000 respectively.

ENTRY:
Finished goods 380,700
Work in process 380,700

Accounts receivable 520,000

Sales 520,000
Journal Entries and Statement of Cost of Goods Sold

Job 101 Job 102 Total

Work in process, Jan.1 P 11,000 P 4,000 P 15,000
Manufacturing cost:
Direct materials 103,200 84,000 187,200
Direct labor 40,000 80,000 120,000
Applied overhead 22,500 36,000 58,500
Total P176,700 P204,000 P380,700
 Journal Entries and Statement of Cost of Goods Sold
TRANSACTION:
 After allowing a 5% cash discount, a net amount of P494,000
was collected on accounts receivable..

ENTRY:
Cash 494,000
Sales discount 26,000
Accounts receivable 520,000
 Journal Entries and Statement of Cost of Goods Sold
TRANSACTION:
 Marketing and administrative expenses, other than salaries,
paid during the month amounted to P30,000. Other factory
overhead paid, P49,720.

ENTRY:
Marketing and administrative expenses 30,000
Factory overhead control 49,720
Cash 79,720
Journal Entries and Statement of Cost of Goods Sold

TRANSACTION:
 Payments on account, other than payrolls paid, amounted to
P170,000.

ENTRY:
Accounts payable 170,000
Cash 170,000
 Journal Entries and Statement of Cost of Goods Sold
TRANSACTION:
 Applied Factory overhead is closed to factory overhead control.
The over and under applied overhead is then closed to Cost of
goods sold.

ENTRY:
Applied factory overhead 85,500
Under-applied overhead 3,260
Factory overhead control 88,760

Cost of goods sold 3,260

Under-applied overhead 3,260
 Statement of Cost of Goods Sold
Joselyn Company
Statement of Cost of Goods Sold
Month Ended January 31, 2010
 
Direct materials used P216,350
Direct labor 156,000
Applied factory overhead 85,500
Factory cost 457,850
Work in process, January 1 15,000
Total cost of goods placed in process 472,850
Work in process, January 31 (Job. 103) 92.150
Cost of goods manufactured 380,700
Finished goods, January 1 65,000
Goods available for sale 445,700
Finished goods, January 31 65,000
Cost of goods at normal 380,700
Under-applied overhead 3,260
Cost of goods sold at actual P383,960
PART II- Multiple Choice Computational
STATEMENT OF COST OF GOODS SOLD
Raw Materials, beginning P xx
Add: Purchases xx
Total Raw Materials Available P xx
Less: Raw Materials, ending xx
Total Materials Used P xx
Add: Direct Labor xx
Manufacturing Overhead Applied xx
Total Manufacturing Costs P xx
Add: WIP, beginning xx
Total Costs of Goods Put in Process P xx
Less: WIP, ending xx
Total Costs of Goods Manufactured P xx
Add: Finished Goods, beginning xx
Total Goods Available for Sale P xx
Less: Finished Goods, ending xx
Total Cost of Goods Sold P xx
 PART II- Multiple Choice Computational

4)
Materials inventory, beginning P 32,400
Purchases 40,000
Materials available for use 72,400
Materials inventory, ending 34,000
Materials used 38,400
Direct labor 33,000
Factory overhead 17,160
Manufacturing cost 88,560
Work in process inventory, beginning 7,200
Total 95,760
Work in process inventory, ending 16,240
Cost of goods manufactured P 79,520
 PART II- Multiple Choice Computational
5)
Materials inventory, Jan. 1 P 17,000
Purchases 240,000
Freight in 3,000
Materials available for use 260,000
Materials inventory, Dec. 31 19,000
Materials used 241,000
Direct labor 320,000
Factory overhead 188,000
Factory cost 749,000 (1)
Work in process inventory, Jan. 1 12,000
Total 761,000
Work in process inventory, Dec. 31 13,000
Cost of goods manufactured 748,000
Finished goods inventory, Jan. 1 62,000
Goods available for sale 810,000
Finished goods inventory, Dec. 31 46,000
Cost of goods sold P764,000 (2)
 PART II- Multiple Choice Computational
6)
Materials inventory, Jan. 1 P 16,000
Purchases (squeeze) _____ 72,000.
Materials available for use 88,000
Materials inventory, Dec. 31 17,000
Materials used 71,000
Direct labor 30,000
Factory overhead 20,000
Factory cost 121,000
Work in process inventory, Jan. 1 16,000
Total 137,000
Work in process inventory, Dec. 31 30,000
Cost of goods manufactured 107,000
Finished goods inventory, Jan 1 14,000
Goods available for sale 121,000
Finished goods inventory, Dec. 31 20,400
Cost of goods sold (given) P100,600
 PART II- Multiple Choice Computational
7)
Direct materials used P100,000
Direct labor 250,000
Factory overhead:
Factory supplies P 6,000
Indirect labor 50,000
Machine maintenance and repair 10,000
Factory rent, light and power 24,000
Depreciation 10,000
Payroll taxes 30,000 130,000
Factory cost 480,000
Work in process inventory, Jan. 1 30,000
Total 510,000
Work in process inventory, Dec. 31 40,000
Cost of goods manufactured 470,000 (1)
Finished goods inventory, Jan. 1 50,000
Goods available for sale 520,000
Finished goods inventory, Dec. 31 60,000
Cost of goods sold P460,000
 PART II- Multiple Choice Computational
8)
Raw materials inventory, beginning P 44,000
Purchases 600,000
Materials available for use 644,000
Raw materials inventory, ending 60,000
Raw materials used 584,000
Direct labor 240,000
Factory overhead:
Indirect labor P120,000
Taxes, utilities and depreciation 100,000 220,000
Factory cost 1,044,000
Work in process inventory, beginning 80,000
Total 1,124,000
Work in process inventory, end 96,000
Cost of goods manufactured 1,028,000
Finished goods inventory, beginning 50,000
Goods available for sale 1,078,000
Finished goods inventory, end 36,000
Cost of goods sold P1,042,000
THANK YOU!