Question

Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories:

	Beginning Inventory			Ending Inventory
Raw materials inventory	$	138,000		$	225,000
Work in process inventory—Weaving		460,000			465,000
Work in process inventory—Sewing		655,000			825,000
Finished goods inventory		1,446,000			1,256,000

The following additional information describes the company’s manufacturing activities for June:

Raw materials purchases (on credit)	$	645,000
Factory payroll cost (paid in cash)		3,285,000
Other factory overhead cost (Other Accounts credited)		184,000
Materials used
Direct—Weaving	$	284,000
Direct—Sewing		147,000
Indirect		140,000
Labor used
Direct—Weaving	$	1,250,000
Direct—Sewing		385,000
Indirect		1,650,000
Overhead rates as a percent of direct labor
Weaving		85	%
Sewing		160	%
Sales (on credit)	$	5,150,000

1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold.
2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, (c) sale of finished goods, and (d) cost of goods sold.

Answer 1

1)
a)	Cost of products transferred from weaving to sewing						$ 2,591,500.00
b)	Cost of products transferred from sewing to finished goods						$ 3,569,500.00
c)	Cost of goods sold						$ 3,759,500.00

2)	Journal Entries
	Events	Particulars			Debit	Credit
	a)	WIP - Weaving			$ 2,591,500.00
		To WIP - Sewing				$ 2,591,500.00
	b)	WIP - Sewing			$ 3,569,500.00
		To Finished Goods				$ 3,569,500.00
	c)	Accounts Receivable			$ 5,150,000.00
		To Sales				$ 5,150,000.00
	d)	Cost of Goods sold			$ 3,759,500.00
		To Finished Goods				$ 3,759,500.00

Workings:

Work in process inventory—Weaving
Beg. Bal.	$     460,000.00	WIP - Sewing	$ 2,591,500.00
R.M Inv	$     284,000.00
D.L	$ 1,250,000.00
Manu. OH	$ 1,062,500.00	End. Bal.	$     465,000.00
	$ 3,056,500.00		$ 3,056,500.00

Work in process inventory—Sewing
Beg. Bal.	$     655,000.00	Finished Goods	$ 3,569,500.00
R.M Inv	$     147,000.00
D.L	$     385,000.00
Manu. OH	$     616,000.00
WIP - Weaving	$ 2,591,500.00	End. Bal	$     825,000.00
	$ 4,394,500.00		$ 4,394,500.00

Finished goods inventory
Beg. Bal.	$ 1,446,000.00	COGS	$ 3,759,500.00
WIP - Sewing	$ 3,569,500.00	End. Bal.	$ 1,256,000.00
	$ 5,015,500.00		$ 5,015,500.00