Question

Entries for Process Cost System

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods	$21,650
Work in Process—Making	8,410
Work in Process—Packing	10,960
Materials	4,750

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.	Materials purchased on account		$269,630
b.	Materials requisitioned for use:
		Phosphate—Making Department	$178,110
		Packaging—Packing Department	61,950
		Indirect materials—Making Department	6,970
		Indirect materials—Packing Department	2,500
c.	Labor used:
		Direct labor—Making Department	$127,250
		Direct labor—Packing Department	85,890
		Indirect labor—Making Department	24,640
		Indirect labor—Packing Department	44,180
d.	Depreciation charged on fixed assets:
		Making Department	$23,230
		Packing Department	19,180
e.	Expired prepaid factory insurance:
		Making Department	$4,400
		Packing Department	1,760
f.	Applied factory overhead:
		Making Department	$60,720
		Packing Department	67,090
g.	Production costs transferred from Making Department to Packing Department		$367,140
h.	Production costs transferred from Packing Department to Finished Goods		$577,810
i.	Cost of goods sold during the period		$579,920

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Item	Account	Debit	Credit
a.	Materials
	Accounts Payable
b.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Materials
c.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Wages Payable
d.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Accumulated Depreciation
e.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Prepaid Insurance
f.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
g.	Work in Process-Packing Department
	Work in Process-Making Department
h.	Finished Goods
	Work in Process-Packing Department
i.	Cost of Goods Sold
	Finished Goods

2. Compute the July 31 balances of the inventory accounts.

Materials	$
Work in Process—Making Department	$
Work in Process—Packing Department	$
Finished Goods	$

3. Compute the July 31 balances of the factory overhead accounts.

Factory Overhead—Making Department	$	Credit
Factory Overhead—Packing Department	$	Debit

Answer 1

Journal Entries
Item	Account	Debit	Credit
a.	Materials	269630
	Accounts Payable		269630
b.	Work in Process-Making Department	178110
	Work in Process-Packing Department	61950
	Factory Overhead-Making Department	6970
	Factory Overhead-Packing Department	2500
	Materials		249530
c.	Work in Process-Making Department	127250
	Work in Process-Packing Department	85890
	Factory Overhead-Making Department	24640
	Factory Overhead-Packing Department	44180
	Wages Payable		281960
d.	Factory Overhead-Making Department	23230
	Factory Overhead-Packing Department	19180
	Accumulated Depreciation		42410
e.	Factory Overhead-Making Department	4400
	Factory Overhead-Packing Department	1760
	Prepaid Insurance		6160
f.	Work in Process-Making Department	60720
	Work in Process-Packing Department	67090
	Factory Overhead-Making Department		60720
	Factory Overhead-Packing Department		67090
g.	Work in Process-Packing Department	367140
	Work in Process-Making Department		367140
h.	Finished Goods	577810
	Work in Process-Packing Department		577810
i.	Cost of Goods Sold	579920
	Finished Goods		579920

Closing Balances
Materials	24850
Work in Process-Making Department	7350
Work in Process-Packing Department	15220
Finished Goods	19540
Factory Overhead-Making Department	1480	Credit
Factory Overhead-Packing Department	530	Debit

T-Accounts
Materials		Work in Process-Making Department
Bal	4750	b	249530		Bal	8410	g	367140
a	269630				b	178110
Total	274380	Total	249530		c	127250
Bal	24850				f	60720
					Total	374490	Total	367140
					Bal	7350
Work in Process-Packing Department		Factory Overhead-Making Department
Bal	10960	h	577810		b	6970	f	60720
b	61950				c	24640
c	85890				d	23230
f	67090				e	4400
g	367140				Total	59240	Total	60720
Total	593030	Total	577810		Bal	-1480
Bal	15220
Factory Overhead-Packing Department		Finished Goods
b	2500	f	67090		Bal	21650	i	579920
c	44180				h	577810
d	19180				Total	599460	Total	579920
e	1760				Bal	19540
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Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed... Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories: Finished Goods $4,920 Work in Process—Making 1,910 Work in Process—Packing 2,490 Materials 1,080 Departmental accounts are maintained for factory overhead,... Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed... Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories: Finished Goods $11,440 Work in Process—Making 4,450 Work in Process—Packing 5,790 Materials 2,510 Departmental accounts are maintained for factory overhead,... Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed... Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. 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