In: Accounting
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 | $26,810 |
Work in Process—Making | 10,420 |
Work in Process—Packing | 13,580 |
Materials | 5,890 |
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 | $333,980 | |
b. | Materials requisitioned for use | ||
Phosphate—Making Department | $220,620 | ||
Packaging—Packing Department | 76,740 | ||
Indirect materials—Making Department | 8,630 | ||
Indirect materials—Packing Department | 3,100 | ||
c. | Labor used | ||
Direct labor—Making Department | $157,610 | ||
Direct labor—Packing Department | 106,380 | ||
Indirect labor—Making Department | 30,520 | ||
Indirect labor—Packing Department | 54,720 | ||
d. | Depreciation charged on fixed assets | ||
Making Department | $28,780 | ||
Packing Department | 23,760 | ||
e. | Expired prepaid factory insurance | ||
Making Department | $5,450 | ||
Packing Department | 2,180 | ||
f. | Applied factory overhead | ||
Making Department | $75,210 | ||
Packing Department | 83,100 | ||
g. | Production costs transferred from Making Department to Packing Department | $454,750 | |
h. | Production costs transferred from Packing Department to Finished Goods | $715,690 | |
i. | Cost of goods sold during the period | $718,310 |
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.
Factory Overhead—Making Department | $ | |
Factory Overhead—Packing Department | $ |
Item Account Debit Credit
a. Materials 3,33,980
Accounts payable 3,33,980
b. work in process-Making
Deptt 2,20,620
work in process-pcking Deptt 76,740
Factory overhead -making Deptt 8,630
Factory overhead -packing Deptt 3,100
Materials 3,09,090
c. work in process-Making
Deptt 1,57,610
work in process-pcking Deptt 1,06,380
Factory overhead -making Deptt 30,520
Factory overhead -packing Deptt 54,720
Wages payable 3,49,230
d. Factory overhead -making
Deptt 28,780
Factory overhead -packing Deptt 23,760
Accumulated Depreciation 52,540
e Factory overhead -making Deptt 5,450
Factory overhead -packing Deptt 2,180
prepaid insurance 7,630
f. work in process-Making Deptt 75,210
work in process-pcking Deptt 83,100
Factory overhead -making
Deptt 75,210
Factory overhead -packing
Deptt 83,100
g. work in process-packing
department 4,54,750
work in process-making
department 4,54,750
h. finished goods 7,15,690
work in process-packing
department 7,15,690
i. cost of goods sold 7,18,310
finished goods 7,18,310
2)
materials 30,780
work in process -Making
Department 9,110
work in process-Packing
Department 18,860
finished goods 24,190
t-Accounts
materials
opening 5,890 Requistioned 3,09,090
purchases 3,33,980
end bal 30,780
work in process-making deptt
opening 10,420
DM 2,20,620 trfg -packing deptt 4,54,750
DL 1,57,610
OH applied 75,210
end bal 9,110
work in process-pcking deptt
opening 13,580
trfd making 4,54,750
DM 76,740 finished goods 7,15,690
DL 1,06,380
OH applied 83,100
end bal 18,860
finished goods
opening 26,810 cost of goods sold 7,18,310
WIP-packing 7,15,690
end bal 24,190
3)
Factory overhea-making department 1,830
Credit
Factory overhead -packing department 470
Debit
Factory overhead-making
department
indirect mt 8,630 WIP 75,210
ind lab 30,520
dep 28,780
prepaid 5,450
end bal 1,830
Factory overhead-packing
department
indirect mt 3,100 WIP 83,100
ind lab 54,720
dep 23,760
prepaid 2,180
end bal 470