In: Accounting
Backflush Costing
Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year:
Required:
1. Prepare the journal entries for traditional costing.
1. | Materials Inventory | ||
Accounts Payable | |||
2. | Work-in-Process Inventory | ||
Materials Inventory | |||
3. | Work-in-Process Inventory | ||
Wages Payable | |||
4. | Overhead Control | ||
Accounts Payable | |||
5. | Work-in-Process Inventory | ||
Overhead Control | |||
6. | Cost of Goods Sold | ||
Finished Goods Inventory | |||
7. | Cost of Goods Sold | ||
Finished Goods Inventory | |||
8. | Cost of Goods Sold | ||
Overhead Control |
Prepare the journal entries for backflush costing. Assume there are two trigger points: (1) the purchase of raw materials and (2) the completion of the goods. If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0". For a compound transaction, if an amount box does not require an entry, leave it blank.
1. | |||
2. | |||
3 & 4. | |||
5. | |||
6. | |||
7. | |||
8. | |||
2. Assume the second trigger point in Requirement 1 is the sale of goods. If an amount box does not require an entry, leave it blank.
Raw Materials and In Process Inventory | |||
What would change for the backflush-costing journal entries?
Entries 6 and 7 are replaced in req 1. with the following entry.
3. Assume there is only one trigger point and it is (a) completion of the goods or (b) sale of goods. If an amount box does not require an entry, leave it blank.
How would the backflush costing journal entries differ from Requirement 1 for (a)?
with the following entry.
How would the backflush costing journal entries differ from Requirement 1 for (b)? If an amount box does not require an entry, leave it blank.
No entry for transaction 1, transaction 6 and 7 are replaced in req 1. with the following entry.