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managerial acctg Record the events in the general journal. Start with the entry from event (a).

managerial acctg Record the events in the general journal. Start with the entry from event (a).

Daniel Kevins

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Widget Construction, Inc., is a home builder in New Mexico. Widget uses a job order costing
system in which each house is a job. Because it constructs houses, the company uses accounts
titled Construction wages and Construction overhead. The following events occurred during
August:

	a. Purchased Materials on account $470,000
	b. Incurred Contrstucion wages of $230,000. Requisitioned direct materials and used direct labor in construction:
			Direct Materials		Direct Labor
		House 402	$ 58,000		$ 40,000
		House 403	$ 63,000		$ 34,000
		House 404	$ 60,000		$ 52,000
		House 405	$ 89,000		$ 51,000
	c. Deprectaion of construction equipment $6,800
	d. Other overhead costs incurred on houses 402 through 405.
		Indirect Labor			$ 44,000
		Equipment rentals in cash			$ 33,000
		Worker liability insurance expired			$ 7,000
	e. Allocated overhead to jobs at the predetermined rate of 40% of direct labor cost
	f. Houses completed 402 and 404
	g. House 404 Sold for $220,000


Deliverables

1.	Record the events in the general journal
2.	Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the
	ending account balances, assuming that the beginning balances were zero.
3.	Add the costs of the unfinished houses, and show that this total amount equals the ending
	balances in the Work in process inventory account.
4.	Add the cost of the completed house that has not yet been sold, and show that this equals
	the ending balance in Finished goods inventory.
5.	Compute gross profit on the house that was sold. What costs must gross profit cover for
	Sherborn Construction?

Deliverable 1
	Record the events in the general journal. Start with the entry from event (a).

	Journal Entry
	Date	Accounts			Debit	Credit
	a.



Event (b) has two journal entries to record. First record the construction wages.
	Journal Entry
	Date	Accounts			Debit	Credit
	b.



Now record the requisitioned direct materials and direct labor used.
	Journal Entry
	Date	Accounts			Debit	Credit
	b.



Next record the depreciation of construction equipment, $6,800.
	Journal Entry
	Date	Accounts			Debit	Credit
	c.



Record the overhead costs incurred on houses 402 through 405.
	Journal Entry
	Date	Accounts			Debit	Credit
	d.




Record the allocated overhead to jobs at the predetermined rate of 40% of direct labor cost.
	Journal Entry
	Date	Accounts			Debit	Credit
	e.



Record the completed houses 402 and 404 in event (f).
	Journal Entry
	Date	Accounts			Debit	Credit
	f.



Begin by recording the revenue from the sale of house 404.
	Journal Entry
	Date	Accounts			Debit	Credit
	g.



Next record the cost of goods sold from the sale of house 404.
	Journal Entry
	Date	Accounts			Debit	Credit
	g.




Deliverable 2
	Post the appropriate entries to the Work in process inventory and Finished goods
	inventory T-accounts. Identify each entry by letter and determine the ending account
	balances. The sharded area is for the letter.


Work in process inventory
(b)		(f)
(e)

Bal.


Finished goods inventory
(f)		(g)


Bal.	–


Deliverable 3
	Show how the costs of the unfinished houses equals the ending balance in
	Work in process inventory.


	Widget Construction, Inc.
	Reconciliation of Work in process inventory Subsidiary
	and Control Accounts
			House #403	House #405	Total WIP Balance
	Unfinished houses:
	Direct materials
	Direct labor
	Manufac. overhead -40% of labor
	Total costs = Work in Process



Deliverable 4
	Show how the costs of the completed houses equals the ending balance in
	Finished goods inventory.


	Widget Construction, Inc.
	Reconciliation of Finished goods inventory Subsidiary
	and Control Accounts
				House#402	Total Finished Goods Bal.
	Completed, unsold house:
	Direct materials
	Direct labor
	Manufac. overhead -40% of labor
	Total cost = Finished Goods bal.



Deliverable 5
	Compute the gross profit for the house that was sold.


	Widget Construction, Inc.
	Gross profit on Homes Sold in August
			House #404
	Sales revenue
	Less: Cost of goods sold
	Gross profit

	The gross profit must cover these types of costs:

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Daniel Kevins

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