Starr Company reports the following information for August. Raw materials purchased on account$81,000 Direct materials used in production$59,800 Factory wages earned (direct labor)$18,650 Overhead rate 135% of direct labor cost Prepare journal entries to record the following events. 1. Raw materials purchased. 2. Direct materials used in production. 3. Direct labor used in production. 4. Applied overhead.

Explanation:

The journal entries are as follows

1. Raw materials inventory A/c Dr $81,000

              To Accounts payable A/c  $81,000

(Being the raw material purchase on account is recorded)

2. Work in process inventory A/c Dr $59,800

          To Raw materials inventory A/c $59,800

(Being the direct material used is recorded)

3. Work in progress A/c Dr $18,650

           To Wages payable A/c $18,650

(Being the direct labor used is recorded)

4. Work in progress A/c Dr  $25,177.50

         To Manufacturing overhead A/c  $25,177.50

(Being the applied overhead is recorded)

It is computed below:

= $18,650 × 135%

= $25,177.50

the third answer is correct.