Question

Acme Food Ltd. company makes TWIXIE chocolate bars. The company has two processing departments: Baking and Mixing. In the Baking Department, the raw ingredients for the one side is made as well as the ingredients for the other side in specially made vats that separate the two sides of the candy bar. In the Mixing Department, the melted chocolate and other ingredients from the Baking Department are carefully packaged into decorative wrapping done by hand. The company uses a process costing system. The following T-accounts show the flow of costs through the two departments in May:

Work in Process—Baking
Bal. April 1	8,000	Transferred out	160,000
Direct materials	42,000
Direct labour	50,000
Overhead	75,000
Work in Process—Mixing
Bal. April 1	4,000	Transferred out	240,000
Transferred in	160,000
Direct labour	36,000
Overhead	45,000

Required: Prepare journal entries showing the flow of costs through the two processing departments during May.

Answer 1

Answer:

	Account titles and explanation	Debit	Credit
1	Work-in process-Baking	$42,000
	Materials		$42,000
	[To record direct materials]
2	Work-in process-Baking	$50,000
	Wages		$50,000
	[To record direct wages]
3	Work-in process-Baking	$75,000
	Factory overhead		$75,000
	[To record applied overhead]
4	Work-in process-Mixing	$160,000
	Work-in process-Baking		$160,000
	[To record transfer from baking to mixing department]
5	Work-in process-Mixing	$36,000
	Wages		$36,000
	[To record direct wages]
7	Work-in process-Mixing	$45,000
	Factory overhead		$45,000
	[To record applied overhead]
8	Finished goods	$240,000
	Work-in process-Mixing		$240,000
	[To record transferred out to finished goods]