Question

Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where it is spun into yarn. The output of the Spinning Department is transferred to the Tufting Department, where carpet backing is added at the beginning of the process and the process is completed. On January 1, Port Ormond Carpet Company had the following inventories:

Finished Goods	$8,400
Work in Process-Spinning Department	1,600
Work in Process-Tufting Department	2,100
Materials	4,500

Departmental accounts are maintained for factory overhead, and both have zero balances on January 1. Manufacturing operations for January are summarized as follows:

Jan.	1	Materials purchased on account, $84,300
	2	Materials requisitioned for use:
		Fiber—Spinning Department, $42,600
		Carpet backing—Tufting Department, $34,500
		Indirect materials—Spinning Department, $4,000
		Indirect materials—Tufting Department, $2,500
	31	Labor used:
		Direct labor—Spinning Department, $27,200
		Direct labor—Tufting Department, $18,600
		Indirect labor—Spinning Department, $12,200
		Indirect labor—Tufting Department, $11,800
	31	Depreciation charged on fixed assets:
		Spinning Department, $5,300
		Tufting Department, $3,300
	31	Expired prepaid factory insurance:
		Spinning Department, $1,200
		Tufting Department, $1,000
	31	Applied factory overhead:
		Spinning Department, $23,100
		Tufting Department, $18,150
	31	Production costs transferred from Spinning Department to Tufting Department, $86,000
	31	Production costs transferred from Tufting Department to Finished Goods, $150,000
	31	Cost of goods sold during the period, $154,500

	Required:
1.	Journalize the entries to record the operations, using the dates provided with the summary of manufacturing operations. Refer to the Chart of Accounts for exact wording of account titles.
2.	Compute the January 31 balances of the inventory accounts.
3.	Compute the January 31 balances of the factory overhead accounts.

Chart of Accounts

CHART OF ACCOUNTS
Port Ormond Carpet Company
General Ledger
ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 141 Work in Process-Spinning Department 142 Work in Process-Tufting Department 151 Factory Overhead-Spinning Department 152 Factory Overhead-Tufting Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expense 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expense 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense

Journal

1. Journalize the entries to record the operations, using the dates provided with the summary of manufacturing operations. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
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Final Questions

2. Compute the January 31 balances of the inventory accounts.

Materials
Work in Process:
• Spinning Department
• Tufting Department
Finished Goods		3. Compute the January 31 balances of the factory overhead accounts. Enter all amounts as positive numbers. Factory Overhead: • Spinning Department • Tufting Department

Answer 1

1.

Date	Account Titles	Debit	Credit
Jan-01	Materials	$      84,300
	Accounts Payable		$      84,300
Jan-02	Work in Process-Spinning Department	$      42,600
	Work in Process-Tufting Department	$      34,500
	Factory Overhead-Spinning Department	$        4,000
	Factory Overhead-Tufting Department	$        2,500
	Materials		$      83,600
Jan-31	Work in Process-Spinning Department	$      27,200
	Work in Process-Tufting Department	$      18,600
	Factory Overhead-Spinning Department	$      12,200
	Factory Overhead-Tufting Department	$      11,800
	Wages Payable		$      69,800
Jan-31	Factory Overhead-Spinning Department	$        5,300
	Factory Overhead-Tufting Department	$        3,300
	Accumulated Depreciation		$        8,600
Jan-31	Factory Overhead-Spinning Department	$        1,200
	Factory Overhead-Tufting Department	$        1,000
	Prepaid Insurance		$        2,200
Jan-31	Work in Process-Spinning Department	$      23,100
	Work in Process-Tufting Department	$      18,150
	Factory Overhead-Spinning Department		$      23,100
	Factory Overhead-Tufting Department		$      18,150
Jan-31	Work in Process-Tufting Department	$      86,000
	Work in Process-Spinning Department		$      86,000
Jan-31	Finished Goods	$   150,000
	Work in Process-Tufting Department		$   150,000
Jan-31	Cost of Goods Sold	$   154,500
	Finished Goods		$   154,500

2.

Materials	$        5,200	Debit
Work in Process
Spinning Department	$        8,500	Debit
Tufting Department	$        9,350	Debit
Finished Goods	$        3,900	Debit

3.

Factory Overhead
Spinning Department	$           400	Credit
Tufting Department	$           450	Debit