Question

Entries for Process Cost System

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods	$11,440
Work in Process—Making	4,450
Work in Process—Packing	5,790
Materials	2,510

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.	Materials purchased on account		$142,480
b.	Materials requisitioned for use
		Phosphate—Making Department	$94,120
		Packaging—Packing Department	32,740
		Indirect materials—Making Department	3,680
		Indirect materials—Packing Department	1,320
c.	Labor used
		Direct labor—Making Department	$67,240
		Direct labor—Packing Department	45,380
		Indirect labor—Making Department	13,020
		Indirect labor—Packing Department	23,340
d.	Depreciation charged on fixed assets
		Making Department	$12,280
		Packing Department	10,140
e.	Expired prepaid factory insurance
		Making Department	$2,330
		Packing Department	930
f.	Applied factory overhead
		Making Department	$32,090
		Packing Department	35,450
g.	Production costs transferred from Making Department to Packing Department		$194,000
h.	Production costs transferred from Packing Department to Finished Goods		$305,320
i.	Cost of goods sold during the period		$306,440

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Compute the July 31 balances of the inventory accounts.

Materials	$
Work in Process—Making Department	$
Work in Process—Packing Department	$
Finished Goods	$

3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$
Factory Overhead—Packing Department	$

Answer 1

Item	Account				Debit	Credit
a.	Materials				142,480
	Accounts payable					142,480
b.	work in process-Making Deptt				94,120
	work in process-pcking Deptt				32,740
	Factory overhead -making Deptt				3,680
	Factory overhead -packing Deptt				1,320
	Materials					131,860
c.	work in process-Making Deptt				67,240
	work in process-pcking Deptt				45,380
	Factory overhead -making Deptt				13,020
	Factory overhead -packing Deptt				23,340
	Wages payable					148,980
d.	Factory overhead -making Deptt				12,280
	Factory overhead -packing Deptt				10,140
	Accumulated Depreciation					22,420
e	Factory overhead -making Deptt				2,330
	Factory overhead -packing Deptt				930
	prepaid insurance					3,260
f.	work in process-Making Deptt				32,090
	work in process-pcking Deptt				35,450
	Factory overhead -making Deptt					32,090
	Factory overhead -packing Deptt					35,450
g.	work in process-packing department				194,000
	work in process-making department					194,000
h.	finished goods				305,320
	work in process-packing department					305,320
i.	cost of goods sold				306,440
	finished goods					306,440
2)
	materials				13,130
	work in process -Making Department				3,900
	work in process-Packing Department				8,040
	finished goods				10,320
	t-Accounts
	materials
	opening	2,510	Requistioned		131,860
	purchases	142,480
	end bal	13,130
	work in process-making deptt
	opening	4,450
	DM	94,120	trfg -packing deptt		194,000
	DL	67,240
	OH applied	32,090
	end bal	3,900
	work in process-pcking deptt
	opening	5,790
	trfd making	194,000
	DM	32,740	finished goods		305,320
	DL	45,380
	OH applied	35,450
	end bal	8,040
	finished goods
	opening	11,440	cost of goods sold		306,440
	WIP-packing	305,320
	end bal	10,320
3)
	Factory overhea-making department				780	Credit
	Factory overhead -packing department				470	Debit
	Factory overhead-making department
	indirect mt	3,680	WIP		32,090
	ind lab	13,020
	dep	12,280
	prepaid	2,330
			end bal		780
	Factory overhead-packing department
	indirect mt	1,320	WIP		35,450
	ind lab	23,340
	dep	10,140
	prepaid	930
	end bal	470