Question

Two Departments, Journal Entries with Supporting Calculations—Weighted Average Method

Parker Laboratories, Inc., produces one of its products in two successive departments. All materials are added at the beginning of the process in Department 1; no materials are used in Department 2. Conversion costs are incurred evenly in both departments. Parker uses the weighted average method for process costing. August 1, 2016, inventory account balances are as follows:

Materials inventory                                                                         $30,000
Work in process - Department 1 (6,000 units, 25% complete)
Direct materials	23,000
Conversion costs	37,500
Work in process - Department 2 (4,000 units, 35% complete)	82,000
Finished goods inventory (4,000 units @ $12.50)	100,000

During August, the following transactions occurred:
1. Purchased material on account, $116,000.
2. Placed 16,000 units of material at $8 per unit into process in Department 1.
3. Distributed total payroll costs: $167,540 of direct labor to Department 1, $84,600 of direct labor to Department 2, and $38,200 of indirect labor to Manufacturing Overhead.
4. Incurred other actual manufacturing overhead costs, $42,400. (Credit Other Accounts.)
5. Applied overhead to the two processing departments: Department 1, $42,560, Department 2, $35,800
6. Transferred 20,000 completed units from Department 1 to Department 2. The 2,000 units remaining in Department 1 were 30% completed with respect to conversion costs.
7. Transferred 15,000 completed units from Department 2 to Finished Goods Inventory. The 9,000 units remaining in Department 2 were 40% completed with respect to conversion costs.
8. Sold 13,000 units on account at $48 per unit. Parker uses weighted average inventory costing for finished goods inventory.

a. Record the August transactions in general journal form for Department 1 and Department 2.
Hint: Complete the product cost reports for Departments 1 and 2 before entering journal entries for transactions 6, 7, and 8.

General Journal
Ref.	Description	Debit	Credit
1.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
2.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
3.	Work in process - Department 1	Answer	Answer
	Work in process - Department 2	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
4.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	Other accounts	Answer	Answer
5.	Work in process - Department 1	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
6.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
7.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
8.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	To record sales.
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	To record cost of goods sold.

b. Prepare a product cost report (with its supporting calculations) for Department 1.
Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.

Parker Laboratories, Inc. Department 1 Flow of Units and Equivalent Units Calculations, August 2016
		Equivalent Units
		% Work	Direct	% Work	Conversion
		Done	Materials	Done	Costs
Complete/Transferred	Answer	Answer%	Answer	Answer%	Answer
Ending Inventory	Answer	Answer%	Answer	Answer%	Answer
Total	Answer		Answer		Answer

Product Cost Report
		Direct	Conversion
		Materials	Costs
Beginning Inventory	$Answer	$Answer	$Answer
Current	Answer	Answer	Answer
Total Costs to Account For	$Answer	$Answer	$Answer
Total Equivalent Units		Answer	Answer
Average cost / Equivalent unit (round 4 decimal places)		$Answer	$Answer
Complete / Transferred:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Goods Manufactured	$Answer
Ending Inventory:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Ending Inventory	$Answer
Total Costs Allocated	$Answer

c. Prepare a product cost report (with its supporting calculations) for Department 2.
Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.

Parker Laboratories, Inc. Department 2 Flow of Units and Equivalent Units Calculations, August 2016
		Equivalent Units
		% Work	Direct	% Work	Conversion
		Done	Materials	Done	Costs
Complete/Transferred	Answer	Answer%	Answer	Answer%	Answer
Ending Inventory	Answer	Answer%	Answer	Answer%	Answer
Total	Answer		Answer		Answer

Product Cost Report
		Direct	Conversion
		Materials	Costs
Beginning Inventory	$Answer	$Answer	$Answer
Current	Answer	Answer	Answer
Total Costs to Account For	$Answer	$Answer	$Answer
Total Equivalent Units		Answer	Answer
Average cost / Equivalent unit (round 4 decimal places)		$Answer	$Answer
Complete / Transferred:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Goods Manufactured	$Answer
Ending Inventory:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Ending Inventory	$Answer
Total Costs Allocated	$Answer

d. Determine the balances remaining in the Materials Inventory account, in each work in process account, and in the Finished Goods Inventory account.

Materials Inventory
Bal.	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Work in Process- Dept. 1
Bal.	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Work in Process- Dept. 2
Bal.	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Finished Goods Inventory
Bal.	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Answer 1

Answer
	General Journal Department -1
Date	Account	Debit	Credit
01/02	Work in process	84000
	Inventory		84000
01/03	Work in process	108000
	Direct labor		108000
01/05	Work in process	88000
	Overhead		88000
	Department-2	290551.18
	Work in process		290551.18
	General Journal Department -2
Date	Account	Debit	Credit
01/03	Work in process	62700
	Direct labor		62700
01/05	Work in process	43900
	Overhead		43900
	Work in process	290551.18
	Depatment 1		290551.18
	Finished goods inventory	409788.70
	Work in process		409788.70
Product Cost Report Department - 1
			Material	Conversion
	Unit beginning in process	3000	900	900
	Unt started during the month	24000	24000	24000
	Total	27000	24900	24900
	Units Completed and transferred out
	Units completed and trf to dep 2	25000	25000	25000
	Units in ending WIP	2000	400	400
	Total	27000	25400	25400
	Cost to be accounted for	Material	Conversion	Total
	Cost in beginng WIP	4560	10640	15200
	Cost incurred during month	84000	196000	280000
	Total cost accounted for	88560	206640	295200
	Total units	25400	25400
	Cost per equivalent unit	3.49	8.14	11.62
	Cost assigent to	Material	Conversion	Total
	Units completed and trf to dep 2	87165.35	203385.83	290551.18
	Units in ending WIP	1394.65	3254.17	4648.82
	Total	88560.00	206640.00	295200.00
Product Cost Report Department - 2
			Material	Conversion
	Unit beginning in process	4000	1600	1600
	Unt started during the month	25000	25000	25000
	Total	29000	26600	26600
	Units Completed and transferred out
	Units completed and trf	26000	26000	26000
	Units in ending WIP	3000	2250	2250
	Total	29000	28250	28250
	Cost to be accounted for
	Cost in beginng WIP	48100.00
	Cost incurred during month	397151.18
	Total cost accounted for	445251.18
	Total units	28250
	Cost per equivalent unit	15.76
	Cost assigent to	total cost
	Units completed and trf to finished WIP	409788.70
	Units in ending WIP	35462.48
	Total	445251.18
Answer
	Inventory In hand
		amount
	Raw material	30000
	Purchased	90000
	issue to department -1	84000
	Inventory In hand	36000
	Work in process in depatment -1
	Inventory In hand	4648.82
	Work in process in depatment -2
	Inventory In hand	35462.48
	Finished goods inventory
	Beginning	32000.00
	transfer from department -2	409788.70
	Sold	315563.36
	Inventory In hand	126225.34