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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	$19,190
Work in Process—Making	7,460
Work in Process—Packing	9,720
Materials	4,210

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		$238,990
b.	Materials requisitioned for use
		Phosphate—Making Department	$157,870
		Packaging—Packing Department	54,910
		Indirect materials—Making Department	6,180
		Indirect materials—Packing Department	2,220
c.	Labor used
		Direct labor—Making Department	$112,790
		Direct labor—Packing Department	76,130
		Indirect labor—Making Department	21,840
		Indirect labor—Packing Department	39,160
d.	Depreciation charged on fixed assets
		Making Department	$20,590
		Packing Department	17,000
e.	Expired prepaid factory insurance
		Making Department	$3,900
		Packing Department	1,560
f.	Applied factory overhead
		Making Department	$53,820
		Packing Department	59,470
g.	Production costs transferred from Making Department to Packing Department		$325,420
h.	Production costs transferred from Packing Department to Finished Goods		$512,150
i.	Cost of goods sold during the period		$514,020

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.	Materials
	Accounts Payable
b.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Materials
c.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Wages Payable
d.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Accumulated Depreciation
e.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Prepaid Insurance
f.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
g.	Work in Process-Packing Department
	Work in Process-Making Department
h.	Finished Goods
	Work in Process-Packing Department
i.	Cost of Goods Sold
	Finished Goods

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	$	Credit
Factory Overhead—Packing Department	$	Debit

Answer 1

Item	Account	Debit	Credit
a.	Materials	238990
	Accounts Payable		238990
b.	Work in Process-Making Department	157870
	Work in Process-Packing Department	54910
	Factory Overhead-Making Department	6180
	Factory Overhead-Packing Department	2220
	Materials		221180
c.	Work in Process-Making Department	112790
	Work in Process-Packing Department	76130
	Factory Overhead-Making Department	21840
	Factory Overhead-Packing Department	39160
	Wages Payable		249920
d.	Factory Overhead-Making Department	20590
	Factory Overhead-Packing Department	17000
	Accumulated Depreciation		37590
e.	Factory Overhead-Making Department	3900
	Factory Overhead-Packing Department	1560
	Prepaid Insurance		5460
f.	Work in Process-Making Department	53820
	Work in Process-Packing Department	59470
	Factory Overhead-Making Department		53820
	Factory Overhead-Packing Department		59470
g.	Work in Process-Packing Department	325420
	Work in Process-Making Department		325420
h.	Finished Goods	512150
	Work in Process-Packing Department		512150
i.	Cost of Goods Sold	514020
	Finished Goods		514020
	2. July 31 balances of the inventory accounts.
	Materials (4210+238990-221180)	22020
	Work in Process—Making Department (7460+157870+112790+53820-325420)	6520
	Work in Process—Packing Department (9720+54910+76130+59470+325420-512150)	13500
	Finished Goods (19190+512150-514020)	17320
	3. July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.
	Factory Overhead—Making Department = 6180+21840+20590+3900-53820 =	-1310	Credit
	Factory Overhead—Packing Department = 2220+39160+17000+1560-59470 =	470	Debit