Question

Refer to the information in Exercise 16-14. Prepare journal entries dated June 30 to record:

(a) raw materials purchases,

(b) direct materials usage,

(c) indirect materials usage,

(d) direct labor usage,

(e) indirect labor usage,

(f) other overhead costs,

(g) overhead applied, and

(h) payment of total payroll costs.

Short answer

Both sides of the journal totals$8,555,000.

Step-by-step solution

Definition of Direct Labor

The cost incurred by the business entity in respect of the labor employed in the production process is known as direct labor. Such cost only includes those laborers that are directly attached to the production.

Journal entries for various transactions

Date	Accounts and Explanation	Debit $	Credit $
(a)	Raw material inventory	$500,000
	Accounts payable		$500,000
(b)	Work-in-process – weaving	$240,000
	Work-in-process – sewing	$75,000
	Raw material inventory		$315,000
(c)	Factory overhead	$120,000
	Raw material inventory		$120,000
(d)	Work-in-process – weaving	$1,200,000
	Work-in-process – sewing	$360,000
	Factory wages payable		$1,560,000
(e)	Factory overhead	$1,500,000
	Factory wages payable		$1,500,000
(f)	Factory overhead	$156,000
	Other accounts		$156,000
(g)	Work-in-process – weaving	$960,000
	Work-in-process – sewing	$540,000
	Factory overhead		$1,500,000
(h)	Payroll expenses	$3,060,000
	Cash		$3,060,000
		$8,555,000	$8,555,000