Question

Cost of Production and Journal Entries

Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March.

Account Work in Process—Papermaking Department							Account No.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Mar.	1	Bal., 9,000 units, 10% completed					21,060
	31	Direct materials, 48,000 units	62,400				83,460
	31	Direct labor	20,500				103,960
	31	Factory overhead	11,528				115,488
	31	Goods transferred, 53,600 units			?		?
	31	Bal., 3,400 units, 20% completed					?

a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production.

	Work in Process-Papermaking Department
	Materials-Pulp

a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.

	Work in Process-Papermaking Department
	Wages Payable
	Factory Overhead-Papermaking Department

a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.

	Work in Process-Converting Department
	Work in Process-Papermaking Department

b. Determine the Work in Process—Papermaking Department March 31 balance. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.
$

Answer 1

a1
Work in Process-Papermaking Department	62400
Materials-Pulp		62400
a2
Work in Process-Papermaking Department	32028
Wages Payable		20500
Factory Overhead-Papermaking Department		11528
a3
Work in Process-Converting Department	110660
Work in Process-Papermaking Department		110660
b
Work in Process—Papermaking Department March 31	4828
Workings:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, March 1	9000	0	8100
Started and completed in March	44600	44600	44600
Transferred to Converting Department in March	53600	44600	52700
Inventory in process, March 31	3400	3400	680
Total units to be assigned costs	57000	48000	53380
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for March in Papermaking Department		62400	32028
Total equivalent units		48000	53380
Cost per equivalent unit		1.30	0.60
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, March 1			21060
Costs incurred in March			94428
Total costs accounted for by the Papermaking Department			115488
Cost allocated to completed and partially completed units:
Inventory in process, March 1 balance			21060
To complete inventory in process, March 1	0	4860	4860
Cost of completed March 1 work in process			25920
Started and completed in March	57980	26760	84740
Transferred to Converting Department in March			110660
Inventory in process, March 31	4420	408	4828
Total costs assigned by the Papermaking Department			115488