Larned Corporation recorded the following transactions for the just completed month. $76,000 in raw materials were purchased on account.
$74,000 in raw materials were used in production. Of this amount, $65,000 was for direct materials and the remainder was for indirect materials.
Total labor wages of $123,000 were paid in cash. Of this amount, $101,500 was for direct labor and the remainder was for indirect labor.
Depreciation of $195,000 was incurred on factory equipment.

Required:
Record the above transactions in journal entries.

Answer and Explanation:

The journal entries are shown below:

Raw materials inventory $76,000  

   To Accounts payable $76,000

(being the raw material purchased on account)

Work in process inventory $65,000

Manufacturing overhead $9,000

      To Raw materials inventory $74,000

(Being the work in process and overhead is recorded)

Work in process inventory $101,500

Manufacturing overhead $21,500

      To Cash $123,000

(being cash paid is recorded)

Manufacturing overhead $195,000

        To Accumulated depreciation-Equipment $195,000

(being the manufacturing overhead is recorded)