par carts inc produces special order golf carts so par carts uses a job order costin 492403

Job Order Costing: T Account Analysis
Par Carts, Inc., produces special-order golf carts, so Par Carts uses a job order costing system. Overhead is applied at the rate of 90 percent of direct labor cost. The following is a list of transactions for January:

Jan 1. Purchased direct materials on account, $215,400.

Jan 2. Purchased indirect materials on account, $49,500.

Jan 4. Requested direct materials costing $193,200 (all used on Job X) and indirect materials costing $38,100 for production.

Jan 10. Paid the following overhead costs: utilities $4,400; manufacturing rent $3,800; and maintenance charges, $3,900.

Jan 15. Recorded the following gross wages and salaries for employees: direct labor, $120,000 (all for Job X); indirect labor $60,620.

Jan 15. Applied overhead to production.

Jan 19. Purchased indirect materials costing $27,550 and direct materials costing $190,450 on account.

Jan 21. Requested direct materials costing $214,750 (Job X $178,170; Job Y $18,170 and Job Z $18,410) and indirect materials costing $31,400 for production.

Jan 31. Recorded the following gross wages and salaries for employees: direct labor $132,000 (Job X $118,500; Job Y $7,000; Job Z $6,500); indirect labor $62,240. Jan 31. Applied overhead to production.

Jan 31. Completed and transferred Job X (375 carts) and Job Y (10 carts) to finished goods inventory; total costs was $855,900.

Jan 31. Shipped Job X to the customer, total production cost was $824,520 and sales price was $996,800.
Jan 31. Recorded these overhead costs (adjusting entries); prepaid insurance expired $3,700; property taxes (payable at year end) $3,400 and depreciation-machinery $15,500.

Required:
1. Record the entries for all transactions in January using T accounts below. Enter the transactions in chronological order. Assume no beginning inventory balances. Use job order cost cards for Job X, Job Y, and Job Z to determine the following costs. If required, round the total costs to the nearest dollar. When computing the product unit cost for Job X and Job Y, round to two decimal places. Also assume that when the payroll was recorded, entries were made to the Payroll Payable account.

2. Compute the amount of underapplied or overapplied overhead as of January 31 and transfer it to the Cost of Goods Sold account. (Use rounded amounts in your computation.)
3. Why should the Overhead account’s underapplied or overapplied overhead be transferred to the Cost of Goods Sold account?