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	$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 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. Factory Overhead: • Spinning Department • Tufting Department

Answer 1

1.

Date	Account Titles and Explanation	Debit	Credit
Jan. 1	Materials	500000
	Accounts Payable		500000
	(To record materials purchased on account)
Jan. 2	Work in process - Spinning department	275000
	Work in process - Tufting department	110000
	Factory overhead - Spinning department	46000
	Factory overhead - Tufting department	39500
	Materials		470500
	(To record materials requisitioned)
Jan. 31	Work in process - Spinning department	185000
	Work in process - Tufting department	98000
	Factory overhead - Spinning department	18500
	Factory overhead - Tufting department	9000
	Wages expense		310500
	(To record labor used)
Jan. 31	Factory overhead - Spinning department	12500
	Factory overhead - Tufting department	8500
	Accumulated depreciation-Factory		21000
	(To record depreciation charged on fixed assets)
Jan. 31	Factory overhead - Spinning department	2000
	Factory overhead - Tufting department	1000
	Prepaid insurance		3000
	(To record expired prepaid factory insurance)
Jan. 31	Work in process - Spinning department	80000
	Work in process - Tufting department	55000
	Factory overhead - Spinning department		80000
	Factory overhead - Tufting department		55000
	(To record factory overhead applied)
Jan. 31	Work in process - Tufting department	547000
	Work in process - Spinning department		547000
	(To record transfer from spinning to tufting department)
Jan. 31	Finished goods	807200
	Work in process - Tufting department		807200
	(To record transfer from tufting department to finished goods)
Jan. 31	Cost of goods sold	795200
	Finished goods		795200
	(To record cost of goods sold)

Note: Kindly confirm the exact wording of account titles per the chart of accounts since the same has not been provided with the question.

2.

Materials	$46500	Debit	(17000+500000-470500)
Work in Process:
Spinning department	$28000	Debit	(35000+275000+185000+80000-547000)
Tufting department	$31300	Debit	(28500+110000+98000+55000+547000-807200)
Finished goods	$74000	Debit	(62000+807200-795200)

3.

Factory Overhead:
Spinning department	$1000	Credit	(46000+18500+12500+2000-80000)
Tufting department	$3000	Debit	(39500+9000+8500+1000-55000)