Question

In: Accounting

Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where...

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
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.
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
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. 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

Solutions

Expert Solution

1. JOURNAL

No. Date Description Debit Credit
1 Jan. 1 Materials 84300
2 Accounts Payable 84300
3 Jan. 2 Work in process - Spinning department 42600
4 Work in process - Tufting department 34500
5 Factory overhead - Spinning department 4000
6 Factory overhead - Tufting department 2500
7 Materials 83600
8 Jan. 31 Work in process - Spinning department 27200
9 Work in process - Tufting department 18600
10 Factory overhead - Spinning department 12200
11 Factory overhead - Tufting department 11800
12 Wages payable 69800
13 Jan. 31 Factory overhead - Spinning department 5300
14 Factory overhead - Tufting department 3300
15 Accumulated depreciation-Factory 8600
16 Jan. 31 Factory overhead - Spinning department 1200
17 Factory overhead - Tufting department 1000
18 Prepaid insurance 2200
19 Jan. 31 Work in process - Spinning department 23100
20 Work in process - Tufting department 18150
21 Factory overhead - Spinning department 23100
22 Factory overhead - Tufting department 18150
23 Jan. 31 Work in process - Tufting department 86000
24 Work in process - Spinning department 86000
25 Jan. 31 Finished goods 150000
26 Work in process - Tufting department 150000
27 Jan. 31 Cost of goods sold 154500
28 Finished goods 154500

Kindly use exact wording for account titles per the chart of accounts since the same has not been provided with the question.

2.

Materials 5200 Debit (4500+84300-83600)
Work in Process:
Spinning department 8500 Debit (1600+42600+27200+23100-86000)
Tufting department 9350 Debit (2100+34500+18600+18150+86000-150000)
Finished goods 3900 Debit (8400+150000-154500)

3.

Factory Overhead:
Spinning department 400 Credit (4000+12200+5300+1200-23100)
Tufting department 450 Debit (2500+11800+3300+1000-18150)

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