Question

1. 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	$27,310
   Work in Process—Making	10,610
   Work in Process—Packing	13,830
   Materials	5,990

   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		$340,100
   b.	Materials requisitioned for use
   		Phosphate—Making Department	$224,660
   		Packaging—Packing Department	78,140
   		Indirect materials—Making Department	8,790
   		Indirect materials—Packing Department	3,150
   c.	Labor used
   		Direct labor—Making Department	$160,510
   		Direct labor—Packing Department	108,340
   		Indirect labor—Making Department	31,080
   		Indirect labor—Packing Department	55,720
   d.	Depreciation charged on fixed assets
   		Making Department	$29,300
   		Packing Department	24,200
   e.	Expired prepaid factory insurance
   		Making Department	$5,550
   		Packing Department	2,220
   f.	Applied factory overhead
   		Making Department	$76,590
   		Packing Department	84,630
   g.	Production costs transferred from Making Department to Packing Department		$463,090
   h.	Production costs transferred from Packing Department to Finished Goods		$728,830
   i.	Cost of goods sold during the period		$731,490

   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				340,100
	Accounts payable					340,100
b.	work in process-Making Deptt				224,660
	work in process-pcking Deptt				78,140
	Factory overhead -making Deptt				8,790
	Factory overhead -packing Deptt				3,150
	Materials					314,740
c.	work in process-Making Deptt				160,510
	work in process-pcking Deptt				108,340
	Factory overhead -making Deptt				31,080
	Factory overhead -packing Deptt				55,720
	Wages payable					355,650
d.	Factory overhead -making Deptt				29,300
	Factory overhead -packing Deptt				24,200
	Accumulated Depreciation					53,500
e	Factory overhead -making Deptt				5,550
	Factory overhead -packing Deptt				2,220
	prepaid insurance					7,770
f.	work in process-Making Deptt				76,590
	work in process-pcking Deptt				84,630
	Factory overhead -making Deptt					76,590
	Factory overhead -packing Deptt					84,630
g.	work in process-packing department				463,090
	work in process-making department					463,090
h.	finished goods				728,830
	work in process-packing department					728,830
i.	cost of goods sold				731,490
	finished goods					731,490
2)
	materials				31,350
	work in process -Making Department				9,280
	work in process-Packing Department				19,200
	finished goods				24,650
	t-Accounts
	materials
	opening	5,990	Requistioned		314,740
	purchases	340,100
	end bal	31,350
	work in process-making deptt
	opening	10,610
	DM	224,660	trfg -packing deptt		463,090
	DL	160,510
	OH applied	76,590
	end bal	9,280
	work in process-pcking deptt
	opening	13,830
	trfd making	463,090
	DM	78,140	finished goods		728,830
	DL	108,340
	OH applied	84,630
	end bal	19,200
	finished goods
	opening	27,310	cost of goods sold		731,490
	WIP-packing	728,830
	end bal	24,650
3)
	Factory overhea-making department				1,870	Credit
	Factory overhead -packing department				660	Debit
	Factory overhead-making department
	indirect mt	8,790	WIP		76,590
	ind lab	31,080
	dep	29,300
	prepaid	5,550
			end bal		1,870
	Factory overhead-packing department
	indirect mt	3,150	WIP		84,630
	ind lab	55,720
	dep	24,200
	prepaid	2,220
	end bal	660