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	$6,000
Work in Process-Spinning Department	1,300
Work in Process-Tufting Department	2,100
Materials	4,800

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, $81,300
	2	Materials requisitioned for use:
		Fiber—Spinning Department, $42,000
		Carpet backing—Tufting Department, $34,000
		Indirect materials—Spinning Department, $3,300
		Indirect materials—Tufting Department, $2,500
	31	Labor used:
		Direct labor—Spinning Department, $26,800
		Direct labor—Tufting Department, $18,700
		Indirect labor—Spinning Department, $11,500
		Indirect labor—Tufting Department, $11,700
	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, $1,100
	31	Applied factory overhead:
		Spinning Department, $21,700
		Tufting Department, $18,400
	31	Production costs transferred from Spinning Department to Tufting Department, $86,500
	31	Production costs transferred from Tufting Department to Finished Goods, $153,600
	31	Cost of goods sold during the period, $155,200

	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 exact wording of account titles.
2.	Compute the January 31 balances of the inventory accounts.
3.	Compute the January 31 balances of the factory overhead account
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 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 exact wording of account titles. PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. Compute the January 31 balances of the inventory accounts. Materials Work in Process: • Spinning Department • Tufting Department Finished Goods 3. Compute the January 31 balances of the factory overhead accounts. Enter all amounts as positive numbers. Factory Overhead: • Spinning Department • Tufting Department

Answer 1

	PORT ORMOND CARPET COMPANY
	JOURNAL
S.No.	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITY
1	01-Jan	Materials	131	81,300		81,300
		Accounts Payable	210		81,300		81,300
		(Being the purchase of materials on account).
2	02-Jan	Work-in-Process   - Spinning Department	141	42,000		42,000
		Work-in-Process - Tufting Department	142	34,000		34,000
		Factory Overhead - Spinning	151	3,300		3,300
		Factory Overhead - Tufting	152	2,500		2,500
		Materials	131		81,800	81,800	-
		(Being the issue of fiber and carpet backing requisitioned by Spinning and Tufting Department transferred to respecrtive Work-in-Progress accounts respectively. Indirect Materials requistioned by the Spinning and Tufting departments transferred to respective Factory Overhead accounts respectively).
3	31-Jan	Work-in-Process - Spinning Department	141	26,800		26,800
		Work-in-Process - Tufting Department	142	18,700		18,700
		Factory Overhead - Spinning	151	11,500		11,500
		Factory Overhead - Tufting	152	11,700		11,700
		Wages Payable	251		68,700		68,700
		(Being the entry to record direct Labor used in Spinning,Tufting respectively. Indirect Labor used in the Spinning and Tufting department transferred to Factory Overhead account)
4	31-Jan	Factory Overhead - Spinning	151	5,300		5,300
		Factory Overhead - Tufting	152	3,300		3,300
		Accumulated Depreciation - Factory	192		8,600	8,600
		(Being the entry to record the depreciation charged on fixed assets employed in the Spinning and Tufting departments respectively).
5	31-Jan	Factory Overhead - Spinning	151	1,200		1,200
		Factory Overhead - Tufting	152	1,100		1,100
		Prepaid Insurance	172		2,300	2,300
		(Being the entry to record expired prepaid insurance. The insurance expense is debitted to Factory Overhead - Spinning and Tufting deparments respectively).
6	31-Jan	Work-in-Process - Spinning Department	141	21,700		21,700
		Work-in-Process - Tufting Department	142	18,400		18,400
		Factory Overhead - Spinning	151		21,700	21,700
		Factory Overhead - Tufting	152		18,400	18,400
		(Being the applied factory overhead for the Spinning and Tufting Department transferred to Work-in-Progress account of Spinning and Tufting department respectively).
7	31-Jan	Work-in-Process - Tufting Department	142	86,500		86,500
		Work-in-Process - Spinning Department	141		86,500	86,500
		(Being the transfer of work-in-process from Spinning to Tufting department)
8	31-Jan	Finished Goods	161	153,600		153,600
		Work-in-Process- Tufting Department	142		153,600	153,600
		(Being the transfer of work-in-process from Tufting department to Finished Goods)
9	31-Jan	Cost of Goods Sold	510	155,200		155,200
		Finished Goods	161		155,200	155,200
		(Being the entry to record cost of goods sold for the month of January)
		TOTAL				1,206,200	150,000
							1,056,200
Q 2 )		Balances of Inventory Accounts as on January 31					Answer
				Opening Balance	Debit	Credit	Closing Balance
				Jan-01			Jan-31
		Materials		4,800	81,300	(81,800)	4,300
		Work-in-Process:
		- Spinning Department - See Note 1 for calculation of debits		1,300	90,500	(86,500)	5,300
		- Tufting Department - See Note 2 for calaculation of debits		2,100	157,600	(153,600)	6,100
		Finished Goods		6,000	153,600	(155,200)	4,400
				14,200	483,000	(477,100)	20,100
		Woking Notes for Debit Balances:
		Work-in-Process : Spinning Dept: $ 42,000+$26800+$21700: Journal Nos.2,3 &6		90,500
		Work-in-Process : Tufting Dept: $34,000+$18,700+$18,400+$86,500: Journal Nos.2,3,6&7		157,600
		Woking Notes for Credit Balances:
		Work-in-Process : Spinning Dept: $86,500: Journal Nos. 7
		Work-in-Process : Tufting Dept: $153,600: Journal Nos.8
Q 3)		Balances of Factory Overhead Accounts as on January 31					Answer
				Opening Balance	Debit	Credit	Closing Balance
				Jan-01			Jan-31
		Factory Overhead - Spinning		-	21,300	(21,700)	(400)	Cr
		Factory Overhead - Tufting		-	18,600	(18,400)	200	Dr.
		Woking Notes for Debits:
		Factory Overhead : Spinning Dept: $3,300+11,500+5,300+1,200 Journal Nos.2,3,4,5
		Factory Overhead : Tufting Dept: $2,500+$11,700+$3,300+$1,100: Journal Nos.2,3,4,5
		Woking Notes for Credits:
		Factory Overhead : Spinning Dept: $21,700 Journal Nos.6
		Factory Overhead : Tufting Dept: $18,400: Journal Nos.6