Assignment 2: weight 10pt

Assume that, XYZ Home construction plc one manufacturing company operating
in ethiopia, Addis Ababa. Company receivs G+4 building order from Bule Hora
university for female dormitory student service from federal ministry of education,
Ethiopia. January 10/2022 company purchaes raw material (direct , 1800,000,indirect
200,000) on account from general construction supplier. On January 15, sent raw material for
production (direct 1,750, 000, indirect 200,000). Total manufacturing
payroll expense incurred during the period (direct labor 390,000 and indirect
labor 110,000).additional overhead cost for the period were 100,000(engineering and supervisor
salary 50,000, utilities 20,000,plant factor depreciation 10,000 and machine maintenance and
repair ,5,000 and, factor insurance 15,000 respectively). As end of period $4,000, 000 completed
and transfer to finished goods department and sold to client was $5,000,000 respectively.

Task 1: complete necessary journal entry for "XYZ "construction plc

SOLUTION

Assuming that the company uses the accrual basis of accounting, the following journal entries
would be necessary:

A.January 10, 2022

Raw Materials Inventory (direct) 1,800,000
Raw Materials Inventory (indirect) 200,000
Accounts Payable 2,000,000
(To record the purchase of raw materials on account from General Construction Supplier.)

B.January 15, 2022

Work in Process Inventory (direct) 1,750,000
Work in Process Inventory (indirect) 200,000
Raw Materials Inventory (direct) 1,750,000
Raw Materials Inventory (indirect) 200,000
(To record the transfer of raw materials to the production process.)

C.Direct Labor Expense - $390,000

Indirect Labor Expense - $110,000
Accrued Payroll - $500,000
(To record total manufacturing payroll expense incurred during the period)

D.Manufacturing Payroll Expense (direct) 390,000

Manufacturing Payroll Expense (indirect) 110,000
Cash 500,000
(To record the payment of manufacturing payroll expenses.)

E.Additional Overhead Cost Expense:

Engineering and Supervisor Salary Expense 50,000
Utilities Expense 20,000
Plant Factor Depreciation Expense 10,000
Machine Maintenance and Repair Expense 5,000
Factory Insurance Expense 15,000
Cash 100,000
(To record additional overhead costs incurred during the period.)

F.End of Period (December 31, 2021)

Finished Goods Inventory 4,000,000
Work in Process Inventory 4,000,000
(To record the completion of production and transfer of finished goods to the Finished Goods
Inventory account.)

H.Sale of Finished Goods:

Accounts Receivable 5,000,000
Sales Revenue 5,000,000
Cost of Goods Sold 4,000,000
Finished Goods Inventory 4,000,000
(To record the sale of finished goods to the client and the cost of goods sold.)