Accumulating Manufacturing Costs During the current month, Ringling Company incurs the following manufacturing costs: a. Raw material purchases of $4,200 on account. b. Factory labor of $18,000. Of that amount, $15,000 relates to wages payable and $3,000 relates to payroll taxes payable.

Question

Accumulating Manufacturing Costs
During the current month, Ringling Company incurs the following manufacturing costs:
a. Raw material purchases of $4,200 on account.
b. Factory labor of $18,000. Of that amount, $15,000 relates to wages payable and $3,000 relates to payroll taxes payable.
c. Factory utilities of $2,200 are payable, prepaid factory insurance of $1,800 has expired, and depreciation on the factory building is $3,500.
Prepare journal entries for each type of manufacturing cost.

Accepted Answer

a. Raw Materials Inventory	4,200
Accounts Payable		4,200
(Purchases of raw materials on account)
b. Factory Labor	18,000
Factory Wages Payable		15,000
Employer Payroll Taxes Payable		3,000
(To record factory labor costs)
c. Manufacturing Overhead	7,500
Utilities Payable		2,200
Prepaid Insurance		1,800
Accumulated Depreciation		3,500
(To record overhead costs)

ACTION PLAN
• Manufacturing overhead costs may be recognized daily. Or, manufacturing overhead may be recorded periodically through a summary entry.

Related exercise material: BE2.1, BE2.2, DO IT! 2.1, E2.1, E2.7, E2.8, and E2.11.

Question 2.DI.1: Accumulating Manufacturing Costs During the current month, R...

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