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	$	156,000		$	217,000
Work in process inventory—Weaving		335,000			360,000
Work in process inventory—Sewing		630,000			975,000
Finished goods inventory		1,306,000			1,346,000

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

Raw materials purchases (on credit)	$	550,000
Factory wages cost (paid in cash)		3,360,000
Other factory overhead cost (Other Accounts credited)		174,000
Materials used
Direct—Weaving	$	244,000
Direct—Sewing		120,000
Indirect		194,000
Labor used
Direct—Weaving	$	1,325,000
Direct—Sewing		405,000
Indirect		1,550,000
Overhead rates as a percent of direct labor
Weaving		80	%
Sewing		160	%
Sales (on credit)	$	4,650,000
----------------------------------------------------------------------------------------------------------------------------------------------- 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, and (c) sale of finished goods. ----------------- a Sewing ?? b Finished Goods ?? c Cost of Goods ??

Answer 1

Solution 1:

Pro-Weave Manufacturer
Cost of products transferred from weaving to sewing
Particulars	Amount
Raw material used in Weaving	$244,000.00
Direct Labor - Weaving	$1,325,000.00
Manufacturing overhead Applied - Weaving (80% of DL)	$1,060,000.00
Cost Incurred during the period in production	$2,629,000.00
Add: Opening WIP	$335,000.00
Less: ending WIP	$360,000.00
Cost of goods transferred from Weaving to Sewing	$2,604,000.00

Pro-Weave Manufacturer
Cost of products transferred from Sewing to Finished Goods
Particulars	Amount
Cost of goods transferred from Weaving	$2,604,000.00
Raw material used in Sewing	$120,000.00
Direct Labor - Weaving	$405,000.00
Manufacturing overhead Applied - Weaving (160% of DL)	$648,000.00
Cost Incurred during the period in production	$3,777,000.00
Add: Opening WIP	$630,000.00
Less: ending WIP	$975,000.00
Cost of goods manufactured and transferred to finished goods	$3,432,000.00

Pro-Weave Manufacturer
Schedule of cost of goods Sold
Particulars	Amount
Beginning finished goods inventory	$1,306,000.00
Add: Cost of goods manufactured	$3,432,000.00
Less: ending finished goods inventory	$1,346,000.00
Cost of goods sold	$3,392,000.00

Solution 2:

Journal Entries - Pro-Weave Manufacturer
Event	Particulars	Debit	Credit
a	Work in Process - Sewing Department Dr	$2,604,000.00
	To Work in process - Weaving Department		$2,604,000.00
	(To cost of completed units in weaving transferred to Sewing department)
b	Finished Goods Inventory Dr	$3,432,000.00
	To Work in process - Sewing Department		$3,432,000.00
	(To cost of completed units in sewing transferred to finished goods)		$120,000.00
c-1	Accounts receivables Dr	$4,650,000.00
	To Sales Revenue		$4,650,000.00
	(To record sale finished goods)
c-2	Cost of goods sold Dr	$3,392,000.00
	To Finished goods inventory		$3,392,000.00
	(Being cost of inventory sold transferred to COGS)