Question

Malone Company has adopted a JIT management system and has the following transactions in August:

a. Purchased raw materials on account, \(50,000.

b. Incurred labor and overhead costs, \)70,000.

c. Completed 500 units with standard costs of \(95 for direct materials and \)150 for conversion costs.

d. Sold on account 475 units for $300 each.

10. Record the journal entries for Malone Company for August.

11. Open a T-account for Conversion Costs

Short answer

Finished Goods Inventory: $122,500

Over Allocated Conversion Cost: $5,000

Step-by-step solution

Journal Entries

Date	Description	Debit	Credit
a)	Raw and In-process Inventory	$50,000
	Accounts Payable		$50,000
	Being inventory purchased
b)	Conversion Cost	$70,000
	Overhead payable		$70,000
	Being labor and overhead cost incurred
c)	Finished Goods Inventory	$122,500
	Raw and In-process Inventory		$47,500
	Conversion Cost		$75,000
	Being inventory and overhead costs transferred
d)	Accounts Receivables	$142,500
	Sales revenue		$142,500
	Being Sales made on account
	Cost of goods sold	$116,375
	Finished Goods Inventory		$116,375
	Being cost of goods incurred for sale

‘T’ account for Conversion Cost

Conversion Cost

Date	Particular	Amount	Date	Particular	Amount
b)	Overheads payable	$70,000	c)	Finished Goods inventory	$75,000
Aug 31	Cost of Goods Sold	$5,000

Journal Entry for overallocation

Date	Description	Debit	Credit
Aug 31	Conversion Cost	$5,000
	Cost of Goods Sold		$5,000
	Being over allocation adjusted