Question

During January, its first month of operations, Knox Company accumulated the following manufacturing costs: raw materials $4000 on account, factory labor $6000 of which $5200 relates to factory wages payable and $800 relates to payroll taxes payable and utilities payable $2000. Prepare journal entries for each type of manufacturing cost.

Answer 1

The journal entries are as follows:

(a) raw materials $4000 on account

Material inventory A/c Dr. $4,000

To Accounts payable A/c $4,000

(b) Factory labor $6000 of which $5200 relates to factory wages payable and $800 relates to payroll taxes payable

Work in process A/c Dr. $6000

To Factory wages payable $5,200

To Payroll taxes payable $800

(c) utilities payable $2000

Factory overhead A/c Dr. $2000

To Utilities payable $2000