Question 1: Learned Corporation Recorded The Following Trans

Question 1larned Corporation Recorded The Following Transactions For T

Question 1 Larned Corporation recorded the following transactions for the just completed month. a. $80,000 in raw materials were purchased on account. b. $71,000 in raw materials were used in production. Of this amount, $62,000 was for direct materials and the remainder was for indirect materials. c. Total labor wages of $112,000 were paid in cash. Of this amount, $101,000 was for direct labor and the remainder was for indirect labor. d. Depreciation of $175,000 was incurred on factory equipment.

Required: Record the above transactions in journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No. Transaction General Journal Debit Credit 1 a 2 b 3 c 4 d

Paper For Above instruction

The task involves recording a series of manufacturing transactions into appropriate journal entries. These transactions include purchasing raw materials, utilizing raw materials for production, paying wages, and accounting for depreciation on factory equipment. Accurate journal entries are essential for reflecting these activities in the company's financial records, and they form the foundation for further cost and financial analysis in managerial and financial accounting.

Answer to the assignment

Introduction

Recording transactions systematically in the accounting journal is fundamental for accurate financial reporting and cost control. Manufacturing companies like Larned Corporation need to document each activity that affects their manufacturing costs to ensure proper cost allocation, inventory valuation, and financial statement preparation. This report presents the journal entries corresponding to the specific transactions described for the month, following standard accounting principles.

Journal Entries for Larned Corporation's Transactions

  1. Purchase of Raw Materials

    The purchase of raw materials on account increases raw materials inventory and creates a liability until paid. The journal entry is:

    Debit Raw Materials Inventory $80,000
    

    Credit Accounts Payable $80,000

  2. Use of Raw Materials in Production

    The usage of raw materials includes both direct and indirect materials. Direct materials are directly traceable to the product, while indirect materials are part of manufacturing overhead.

    • Raw materials used (total): $71,000
    • Direct materials: $62,000
    • Indirect materials: $9,000 ($71,000 - $62,000)

    The journal entry to record raw materials used incorporates the direct materials into work-in-process and indirect materials into manufacturing overhead:

    Debit Work in Process Inventory $62,000
    

    Debit Manufacturing Overhead $9,000
    

    Credit Raw Materials Inventory $71,000

  3. Payment of Labor Wages

    Total wages paid: $112,000

    • Direct wages: $101,000
    • Indirect wages: $11,000 ($112,000 - $101,000)

    Wages payable and wages expenses are recorded accordingly:

    Debit Work in Process Inventory $101,000
    

    Debit Manufacturing Overhead $11,000
    

    Credit Cash $112,000

  4. Depreciation on Factory Equipment

    This expense increases manufacturing overhead accumulated over time:

    Debit Manufacturing Overhead $175,000
    

    Credit Accumulated Depreciation—Factory Equipment $175,000

Conclusion

The above journal entries accurately reflect the financial activities associated with raw materials, labor, and depreciation during the month. Proper documentation of these transactions ensures precise calculation of manufacturing costs, inventory valuation, and profit analysis, which are essential for managerial decision-making and external financial reporting.

References

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  • Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems (13th ed.). McGraw-Hill Education.

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