Question

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 $12,790 Work in Process—Making 4,970 Work in Process—Packing 6,480 Materials 2,810 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 $159,330 b. Materials requisitioned for use Phosphate—Making Department $105,250 Packaging—Packing Department 36,610 Indirect materials—Making Department 4,120 Indirect materials—Packing Department 1,480 c. Labor used Direct labor—Making Department $75,190 Direct labor—Packing Department 50,750 Indirect labor—Making Department 14,560 Indirect labor—Packing Department 26,100 d. Depreciation charged on fixed assets Making Department $13,730 Packing Department 11,340 e. Expired prepaid factory insurance Making Department $2,600 Packing Department 1,040 f. Applied factory overhead Making Department $35,880 Packing Department 39,640 g. Production costs transferred from Making Department to Packing Department $216,940 h. Production costs transferred from Packing Department to Finished Goods $341,430 i. Cost of goods sold during the period $342,680 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. Item Account Debit Credit a. b. c. d. e. f. g. h. i. 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 $

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.

Item	Account	Debit	Credit
a.
b.
c.
d.
e.
f.
g.
h.
i.

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				159,330
	Accounts payable					159,330
b.	work in process-Making Deptt				105,250
	work in process-pcking Deptt				36,610
	Factory overhead -making Deptt				4,120
	Factory overhead -packing Deptt				1,480
	Materials					147,460
c.	work in process-Making Deptt				75,190
	work in process-pcking Deptt				50,750
	Factory overhead -making Deptt				14,560
	Factory overhead -packing Deptt				26,100
	Wages payable					166,600
d.	Factory overhead -making Deptt				13,730
	Factory overhead -packing Deptt				11,340
	Accumulated Depreciation					25,070
e	Factory overhead -making Deptt				2,600
	Factory overhead -packing Deptt				1,040
	prepaid insurance					3,640
f.	work in process-Making Deptt				35,880
	work in process-pcking Deptt				39,640
	Factory overhead -making Deptt					35,880
	Factory overhead -packing Deptt					39,640
g.	work in process-packing department				216,940
	work in process-making department					216,940
h.	finished goods				341,430
	work in process-packing department					341,430
i.	cost of goods sold				342,680
	finished goods					342,680
2)
	materials				14,680
	work in process -Making Department				4,350
	work in process-Packing Department				8,990
	finished goods				11,540
	t-Accounts
	materials
	opening	2,810	Requistioned		147,460
	purchases	159,330
	end bal	14,680
	work in process-making deptt
	opening	4,970
	DM	105,250	trfg -packing deptt		216,940
	DL	75,190
	OH applied	35,880
	end bal	4,350
	work in process-pcking deptt
	opening	6,480
	trfd making	216,940
	DM	36,610	finished goods		341,430
	DL	50,750
	OH applied	39,640
	end bal	8,990
	finished goods
	opening	12,790	cost of goods sold		342,680
	WIP-packing	341,430
	end bal	11,540
3)
	Factory overhea-making department				870	Credit
	Factory overhead -packing department				320	Debit
	Factory overhead-making department
	indirect mt	4,120	WIP		35,880
	ind lab	14,560
	dep	13,730
	prepaid	2,600
			end bal		870
	Factory overhead-packing department
	indirect mt	1,480	WIP		39,640
	ind lab	26,100
	dep	11,340
	prepaid	1,040
	end bal	320