Question

Prepare journal entries to record the following production activities for Hotwax.

1. Requisitioned \(9,000 of indirect materials for use in production of surfboard wax.
2. Incurred \)156,000 overhead costs (credit Other Accounts).
3. Applied overhead at the rate of 140% of direct labor costs. Direct labor costs were $125,000.

Short answer

The total debit and credit side of the journal is $340,000.

Step-by-step solution

Meaning of Indirect materials.

The assets utilised in a manufacturer's manufacturing handlethat cannot be connected straightforwardly to the products or batches of items they produce are known as indirect materials.

Preparing journal entry for Requisitioned $9,000 of indirect materials for use in the production of surfboard wax.

Date	Particulars	Debit ($)	Credit ($)
	Work-in-process inventory	9,000
	Inventory		9,000

Preparing journal entry for Incurred $156,000 overhead costs.

Date	Particulars	Debit ($)	Credit ($)
	Factory overhead	156,000
	Other accounts		156,000

Preparing journal entry for Applied overhead at 140% of direct labour costs. Direct labour costs were $125,000.

Date	Particulars	Debit ($)	Credit ($)
	Work-in-process inventory	175,000
	Factory overhead		175,000