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	$29,270
Work in Process—Making	11,380
Work in Process—Packing	14,830
Materials	6,430

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		$364,620
b.	Materials requisitioned for use
		Phosphate—Making Department	$240,860
		Packaging—Packing Department	83,780
		Indirect materials—Making Department	9,420
		Indirect materials—Packing Department	3,380
c.	Labor used
		Direct labor—Making Department	$172,070
		Direct labor—Packing Department	116,140
		Indirect labor—Making Department	33,320
		Indirect labor—Packing Department	59,740
d.	Depreciation charged on fixed assets
		Making Department	$31,420
		Packing Department	25,940
e.	Expired prepaid factory insurance
		Making Department	$5,950
		Packing Department	2,380
f.	Applied factory overhead
		Making Department	$82,110
		Packing Department	90,730
g.	Production costs transferred from Making Department to Packing Department		$496,470
h.	Production costs transferred from Packing Department to Finished Goods		$781,350
i.	Cost of goods sold during the period		$784,210

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.
b.
c.
d.
e.
f.
g.
h.
i.

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. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$
Factory Overhead—Packing Department	$

Answer 1

Item	Account				Debit	Credit
a.	Materials				364,620
	Accounts payable					364,620
b.	work in process-Making Deptt				240,860
	work in process-pcking Deptt				83,780
	Factory overhead -making Deptt				9,420
	Factory overhead -packing Deptt				3,380
	Materials					337,440
c.	work in process-Making Deptt				172,070
	work in process-pcking Deptt				116,140
	Factory overhead -making Deptt				33,320
	Factory overhead -packing Deptt				59,740
	Wages payable					381,270
d.	Factory overhead -making Deptt				31,420
	Factory overhead -packing Deptt				25,940
	Accumulated Depreciation					57,360
e	Factory overhead -making Deptt				5,950
	Factory overhead -packing Deptt				2,380
	prepaid insurance					8,330
f.	work in process-Making Deptt				82,110
	work in process-pcking Deptt				90,730
	Factory overhead -making Deptt					82,110
	Factory overhead -packing Deptt					90,730
g.	work in process-packing department				496,470
	work in process-making department					496,470
h.	finished goods				781,350
	work in process-packing department					781,350
i.	cost of goods sold				784,210
	finished goods					784,210
2)
	materials				33,610
	work in process -Making Department				9,950
	work in process-Packing Department				20,600
	finished goods				26,410
	t-Accounts
	materials
	opening	6,430	Requistioned		337,440
	purchases	364,620
	end bal	33,610
	work in process-making deptt
	opening	11,380
	DM	240,860	trfg -packing deptt		496,470
	DL	172,070
	OH applied	82,110
	end bal	9,950
	work in process-pcking deptt
	opening	14,830
	trfd making	496,470
	DM	83,780	finished goods		781,350
	DL	116,140
	OH applied	90,730
	end bal	20,600
	finished goods
	opening	29,270	cost of goods sold		784,210
	WIP-packing	781,350
	end bal	26,410
3)
	Factory overhea-making department				2,000	Credit
	Factory overhead -packing department				470	Debit
	Factory overhead-making department
	indirect mt	9,420	WIP		82,110
	ind lab	33,320
	dep	31,420
	prepaid	5,950
			end bal		2,000
	Factory overhead-packing department
	indirect mt	3,380	WIP		90,730
	ind lab	59,740
	dep	25,940
	prepaid	2,380
	end bal	470