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	$8,400
Work in Process-Spinning Department	1,600
Work in Process-Tufting Department	2,100
Materials	4,500

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, $84,300
	2	Materials requisitioned for use:
		Fiber-Spinning Department, $42,600
		Carpet backing-Tufting Department, $34,500
		Indirect materials-Spinning Department, $4,000
		Indirect materials-Tufting Department, $2,500
	31	Labor used:
		Direct labor-Spinning Department, $27,200
		Direct labor-Tufting Department, $18,600
		Indirect labor-Spinning Department, $12,200
		Indirect labor-Tufting Department, $11,800
	31	Depreciation charged on fixed assets:
		Spinning Department, $5,300
		Tufting Department, $3,300
	31	Expired prepaid factory insurance:
		Spinning Department, $1,200
		Tufting Department, $1,000
	31	Applied factory overhead:
		Spinning Department, $23,100
		Tufting Department, $18,150
	31	Production costs transferred from Spinning Department to Tufting Department, $86,000
	31	Production costs transferred from Tufting Department to Finished Goods, $150,000
	31	Cost of goods sold during the period, $154,500

CHART OF ACCOUNTS
Port Ormond Carpet Company
General Ledger
ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 141 Work in Process-Spinning Department 142 Work in Process-Tufting Department 151 Factory Overhead-Spinning Department 152 Factory Overhead-Tufting Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense

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 the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

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JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
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2. Compute the January 31 balances of the inventory accounts. Enter your amounts in positive value.

Materials
Work in Process:
• Spinning Department
• Tufting Department
Finished Goods

3. Compute the January 31 balances of the factory overhead accounts. Enter your amounts in positive value.

Factory Overhead:
• Spinning Department
• Tufting Department

	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 the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
2.	Compute the January 31 balances of the inventory accounts.*
3.	Compute the January 31 balances of the factory overhead accounts.*
	*Enter your amounts in positive value.

Answer 1

Item	Account				Debit	Credit
a.	Materials				84,300
	Accounts payable					84,300
b.	work in process-spinning Deptt				42,600
	work in process-tufting Deptt				34,500
	Factory overhead -spinning Deptt				4,000
	Factory overhead -tufting Deptt				2,500
	Materials					83,600
c.	work in process-spinning Deptt				27,200
	work in process-tufting Deptt				18,600
	Factory overhead -spinning Deptt				12,200
	Factory overhead -tufting Deptt				11,800
	Wages payable					69,800
d.	Factory overhead -spinning Deptt				5,300
	Factory overhead -tufting Deptt				3,300
	Accumulated Depreciation					8,600
e	Factory overhead -spinning Deptt				1,200
	Factory overhead -tufting Deptt				1,000
	prepaid insurance					2,200
f.	work in process-spinning Deptt				23,100
	work in process-tufting Deptt				18,150
	Factory overhead -spinning Deptt					23,100
	Factory overhead -tufting Deptt					18,150
g.	work in process-tufting department				86,000
	work in process-spinning department					86,000
h.	finished goods				150,000
	work in process-tufting department					150,000
i.	cost of goods sold				154,500
	finished goods					154,500
2)	materials				5,200
	work in process -spinning Department				8,500
	work in process-tufting Department				9,350
	finished goods				3,900
	t-Accounts
	materials
	opening	4,500	Requistioned		83,600
	purchases	84,300
	end bal	5,200
	work in process-spinning deptt
	opening	1,600
	DM	42,600	trfg -packing deptt		86,000
	DL	27,200
	OH applied	23,100
	end bal	8,500
	work in process-tuftingg deptt
	opening	2,100
	trfd making	86,000
	DM	34,500	finished goods		150,000
	DL	18,600
	OH applied	18,150
	end bal	9,350
	finished goods
	opening	8,400	cost of goods sold		154,500
	WIP-packing	150,000
	end bal	3,900
3)	Factory overhea-spinning department				400	Credit
	Factory overhead -tuffting department				450	Debit
	Factory overhead-spinning department
	indirect mt	4,000	WIP		23,100
	ind lab	12,200
	dep	5,300
	prepaid	1,200
			end bal		400
	Factory overhead-tufting department
	indirect mt	2,500	WIP		18,150
	ind lab	11,800
	dep	3,300
	prepaid	1,000
	end bal	450