Journal Entries

Account Titles Debit Credit

1. Raw Materials P699,800

Accounts Payable P699,800

2. Manufacturing Overhead 55,200

Work in Process 669,800
Raw Materials 725,000

3. Manufacturing Overhead 192,000

Work in Process 168,000
Sales Commission Expenses 142,880
Administrative Salaries Expenses 248,898
Salaries and Wages Payable 751,778

4. Sales Travel Expenses 48,809

Accounts Payable 48,809

5. Manufacturing Overhead 86,488

Accounts Payable 86,488

6. Advertising Expense 258,750

Accounts Payable 258,750

7. Manufacturing Overhead 685,950

Depreciation Expenses 69,850
Accumulated Depreciation 755,800

8. Manufacturing Overhead 33,500

Insurance Expenses 8,750
Prepaid Insurance 42,250

9. Work in Process 1,092,500

Manufacturing Overhead 1,092,500

10. Finished Goods 1,780,000

Work in Process 1,780,000

11. Accounts Receivable 2,788,200

Sales 2,788,200

Cost of Goods Sold 1,768,000

Finished Goods 1,768,000
Note: Entry 9 – Application of Manufacturing Overhead

Estimated manufacturing Overhead Cost

Predetermined Overhead Rate = Estimated Total Units in the Allocation Base

= P1,380,000 / 120,000 Machine Hours

= P11.5 machine-hour

Manufacturing Overhead Applied to production =

Actual Machine Hours x Predetermined Overhead Rate

= 95,000 hours x P11.5
=P1,092,500
 T-accounts
Accounts Receivable Raw Materials

2,788,200 Bal. 55,800 725,000

699,800

Bal. 30,600

Work in Process Finished Goods

Bal. 42,268 1,780,000 Bal. 51,480 1,768,000

669,800 1,780,000
168,000
1,092,500
Bal. 63,480
Bal. 192,568

Prepaid Insurance Accumulated Depreciation

42,250 755,800

Accounts Payable Salaries and Wages Payable

699,800 751,778
48,809
86,488
258,750

Manufacturing Overhead Sales

55,200 1,092,500 2,788,200

192,000
86,488
685,950
33,500
Bal. 39,362
Administrative Salary Expense Sales Commissions Expense

248,898 142,880

Advertising Expense Depreciation Expense

258,750 69,850

Sales Travel Expense Cost of Goods Sold

48,809 1,768,000

Insurance Expense

8,750
 PLP Manufacturing Corporation
Income Statement
For the Year Ended December 31, 2019

Sales P2,788,200
Less Cost of Goods Sold (P1,768,000 - P39,362) 1,728,638

Gross Profit: P1,059,562

Less Selling and Administrative Expense:

Commissions Expense P142,880

Administrative Expense 248,898
Sales Travel Expense 48,809
Advertising Expense 258,750
Depreciation Expense 69,850
Insurance Expense 8,750 P777,937

Net Operating Income: P281,625

Journal Entry to Close the Balance in Manufacturing Overhead Account

Account Titles Debit Credit

Manufacturing Overhead P39,362
Cost of Goods Sold P39,362