General Ledger Practical Problems and Solutions

Problem No.1: (Opening a Factory Ledger)

The following balance appeared in the books of Marry & Company on December 31, 2018.


Cash $39,000
Accounts Receivable 15,000
Stores 21,000
Work-in-process Materials 10,000
Work-in-process Labour 7,000
Work-in-process factory overhead 8,000
Finished Goods 14,000
Machinery & Equipment 1,36,000
Land & Building 2,40,000
Capital Stock $2,50,000
Retained Earnings 40,000
Mortgage 2,00,000
$4,90,000 $4,90,000

Considering the difficulties and other problems encountered by the accountant during the preceding year the management of the company has decided to establish a factory ledger at the beginning of the year, i.e. immediately after the books have been closed for the preceding year. You are required to pass the necessary journal entries bot in General Ledger and the Factory Ledger.


Opening a Factory Ledger

General-Ledger-Practical-Problems-Solutions Problem No. 2

The AMH Corporation uses a general ledger and factory ledger. The following transactions took place:


2: Purchased raw materials for the factory $20,000. Terms 1/10, n/30.
4: Requisitions of $4,000 of direct materials and $2,000 of indirect materials were filled from the stockroom.
8: Factory Payroll of $2,000 for the week was made up at the home office, $1,730 in cash was sent to the factory. Excise Dury was $90 and Income taxes were $180 ($1,880 direct labour and $120 factory repairs).
14: Depreciation of $200 for factory equipment was recorded. (Assets accounts are kept on the general office books).
14: A job was completed in the factory with $960 direct labour and $450 of materials being previously charged to the job. FOH is to be applied at 66, 2/3% of the direct labour.
15 Miscellaneous factory overhead amounting to $800 was vouched and paid by the home office.
16: The completed job was shipped to the ABC Company on instructions from the home office. Customer was billed for $2,300.

You are required to pass general entries on the factory books and the general office books.


Factory Ledger Journal Entries

Problem No. 3

The following transactions were completed by Nissan Corporation which maintains both a factory ledger and general ledger.

(a). Stores Purchased and received at the factory $23,000.

(b). Requisitions received and materials, supplies issued as follows:

Direct Material: $18,500
Manufacturing Supplies: $5,000

(c). Paid the factory payroll for the week as follows:

Direct Labour: $12,000
Indirect Labour: $6,500

Deduct from the payroll 10% for provident fund and $1,150 for income tax. A factory payroll book is maintained at the factory. At the end of each week the factory payroll is reported to and paid by the general office. The only payroll entry on the factory books is one distributing the payroll to the appropriate accounts. The company also contributes 10% of the payroll from its side for provident fund.

(d). Direct materials returned to the storeroom.

(e). A transfer voucher from the general office shows the following expenses to be recorded.

Insurance of Factory Building and Equipment:

(Prepaid account in general books): 500
Taxes on Factory Building: 100
Heat, Light and Power: 550
Depreciation of Machinery: 500
Depreciation of Factory Building: 350

(f). Manufacturing overhead is applied to production at a rate of 150% of direct labour cost.
(g). Work completed during the week: $47,000
(h). Goods costing $45,000 were sold for $55,000


Prepare journal entries to record the above transactions on the general office books and on the factory books. Use only one work in process.



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