Question

Fast-Flow Paints produces mixer base paint through a two–stage process, Mixing and Packaging. The following events depict the movement of value into and out of production. Journalize each event if appropriate; if not, provide a short narrative reason as to why you chose not to journalize the action. Nelson, the production manager, accepts an order to continue processing the current run of mixer base paint.

(a)	Materials worth $27,000.00 are withdrawn from raw materials inventory. Of this amount, $25,500.00 will be issued to the Mixing Department, and the balance will be issued to the Maintenance Department to be used on production line machines.
(b)	Nelson calculates that labor for the period is $12,500.00. Of this amount, $1,750.00 is for maintenance and indirect labor. The remainder is directly associated with mixing.
(c)	Nelson, who is paid a salary but earns about $35.00 per hour, spends one hour inspecting the production line.
(d)	The manufacturing overhead drivers for mixing are hours of mixer time at $575.00 per hour, and material movements from materials at $125.00 per movement. An inspection of the machine timers reveals that a total of eight hours has been consumed in making this product. An inspection of "stocking orders" indicates that only one material movement was utilized to load the raw materials. (Note: All values have been journalized to Factory Overhead. You need only apply them to the production run.)
(e)	Within Fast-Flow, items are transferred between departments at a standard cost. This production run has created 4,015 gallons of mixer base paint. This paint is transferred to Packaging at a standard cost of $10.05 per gallon. (Round calculation to the nearest whole dollar.)
(f)	Packaging draws $755.00 of materials for packaging of this production run.
(g)	Packaging documents that 12 hours of direct labor at $10.25 per hour were consumed in the packaging of this production run.
(h)	Packaging uses a cost driver of direct labor hours to allocate manufacturing overhead at the rate of $25.00 per hour.
(i)	Packaging transfers 4,015 gallons of packaged goods to Finished Goods Inventory at a standard cost of $10.34 per gallon. (Round calculation to the nearest whole dollar.)

CHART OF ACCOUNTS
General Ledger
ASSETS 110 Cash 121 Accounts Receivable 122 Supplies 123 Prepaid Insurance 130 Materials 132 Work in Process-Mixing 133 Work in Process-Packaging 134 Factory Overhead - Mixing 135 Factory Overhead - Packaging 136 Finished Goods Inventory 181 Land 191 Machinery LIABILITIES 210 Accounts Payable 231 Notes Payable 232 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary	REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Insurance Expense 532 Utilities Expense 533 Supplies Expense 560 Depreciation Expense-Machinery 590 Miscellaneous Expense 710 Interest Expense

Prepare the journal entries for each event depict the movement of value into and out of production on December 31. Refer to the Chart of Accounts for exact wording of account titles. Round answers to the nearest dollar.

PAGE 1

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

c. Nelson, who is paid a salary but earns about $35.00 per hour, spends one hour inspecting the production line.

Nelson's inspection of the assembly line is     chargeable to production. Since he is the manager of a production unit, it will be incorporated in the cost of production through the allocation of overhead.

Answer 1

Answer
	Journal Entries
	Particulars	Amount in $	Amount in $
1	Work in Progress Mixing	25500
	Work in Progress Packaging	1500
	To Materials		27000
	( Raw material assigned to each department)
2b and c.	Wages expense	1750
	Work in Progress Mixing	10750
	To Wages Payable		12500
	( Labour hours charged to Mixing and maintenance)
3	Work in Progress Mixing	4725
	To Factory Overheads-mixing		4725
	( Factory Overhead charged to Work in progess)
4	Work in Progress Packaging	40351
	To Factory overheads- Packaging		40351
	( Paint costs charged to packaging)
5	Work in Progress Packaging	755
	To Materials		755
	(Being materials drwan for packaging)
6	Work in Progress Packaging	123
	To Wages Payable	123
	(Labour charges paid to packaging)
7	Work in Progress Packaging	300
	To Factory overheads- Packaging	300
	(Manufacuring overhead allocated to packaging)
8	Finished Goods Inventory	41515
	To Work in Progress Packaging		41515
	(Transfer from packaging to finished goods inventory)
9	Work in Progress Mixing	35
	To Factory overheads Mixing		35
	(Being Salary paid to Nelson)