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In: Accounting

Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where...

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 $62,000 Work in Process-Spinning Department 35,000 Work in Process-Tufting Department 28,500 Materials 17,000 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, $500,000 2 Materials requisitioned for use: Fiber—Spinning Department, $275,000 Carpet backing—Tufting Department, $110,000 Indirect materials—Spinning Department, $46,000 Indirect materials—Tufting Department, $39,500 31 Labor used: Direct labor—Spinning Department, $185,000 Direct labor—Tufting Department, $98,000 Indirect labor—Spinning Department, $18,500 Indirect labor—Tufting Department, $9,000 31 Depreciation charged on fixed assets: Spinning Department, $12,500 Tufting Department, $8,500 31 Expired prepaid factory insurance: Spinning Department, $2,000 Tufting Department, $1,000 31 Applied factory overhead: Spinning Department, $80,000 Tufting Department, $55,000 31 Production costs transferred from Spinning Department to Tufting Department, $547,000 31 Production costs transferred from Tufting Department to Finished Goods, $807,200 31 Cost of goods sold during the period, $795,200 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.

Solutions

Expert Solution

Item Account Debit Credit
a. Materials 500,000
Accounts payable 500,000
b. work in process-spinning Deptt 275,000
work in process-tufting Deptt 110,000
Factory overhead -spinning Deptt 46,000
Factory overhead -tufting Deptt 39,500
Materials 470,500
c. work in process-spinning Deptt 185,000
work in process-tufting Deptt 98,000
Factory overhead -spinning Deptt 18,500
Factory overhead -tufting Deptt 9,000
Wages payable 310,500
d. Factory overhead -spinning Deptt 12,500
Factory overhead -tufting Deptt 8,500
Accumulated Depreciation 21,000
e Factory overhead -spinning Deptt 2,000
Factory overhead -tufting Deptt 1,000
prepaid insurance 3,000
f. work in process-spinning Deptt 80,000
work in process-tufting Deptt 55,000
Factory overhead -spinning Deptt 80,000
Factory overhead -tufting Deptt 55,000
g. work in process-tufting department 547,000
work in process-spinning department 547,000
h. finished goods 807,200
work in process-tufting department 807,200
i. cost of goods sold 795,200
finished goods 795,200
2) materials 46,500
work in process -spinning Department 28,000
work in process-tufting Department 31,300
finished goods 74,000
t-Accounts
materials
opening 17,000 Requistioned 470,500
purchases 500,000
end bal 46,500
work in process-spinning deptt
opening 35,000
DM 275,000 trfg -packing deptt 547,000
DL 185,000
OH applied 80,000
end bal 28,000
work in process-tuftingg deptt
opening 28,500
trfd making 547,000
DM 110,000 finished goods 807,200
DL 98,000
OH applied 55,000
end bal 31,300
finished goods
opening 62,000 cost of goods sold 795,200
WIP-packing 807,200
end bal 74,000
3) Factory overhea-spinning department 1,000 Credit
Factory overhead -tuffting department 3,000 Debit
Factory overhead-spinning department
indirect mt 46,000 WIP 80,000
ind lab 18,500
dep 12,500
prepaid 2,000
end bal 1,000
Factory overhead-tufting department
indirect mt 39,500 WIP 55,000
ind lab 9,000
dep 8,500
prepaid 1,000
end bal 3,000

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