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	$19,070
Work in Process—Making	7,410
Work in Process—Packing	9,660
Materials	4,190

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		$237,460
b.	Materials requisitioned for use
		Phosphate—Making Department	$156,860
		Packaging—Packing Department	54,560
		Indirect materials—Making Department	6,140
		Indirect materials—Packing Department	2,200
c.	Labor used
		Direct labor—Making Department	$112,070
		Direct labor—Packing Department	75,640
		Indirect labor—Making Department	21,700
		Indirect labor—Packing Department	38,910
d.	Depreciation charged on fixed assets
		Making Department	$20,460
		Packing Department	16,900
e.	Expired prepaid factory insurance
		Making Department	$3,880
		Packing Department	1,550
f.	Applied factory overhead
		Making Department	$53,480
		Packing Department	59,090
g.	Production costs transferred from Making Department to Packing Department		$323,330
h.	Production costs transferred from Packing Department to Finished Goods		$508,870
i.	Cost of goods sold during the period		$510,730

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				237,460
	Accounts payable					237,460
b.	work in process-Making Deptt				156,860
	work in process-pcking Deptt				54,560
	Factory overhead -making Deptt				6,140
	Factory overhead -packing Deptt				2,200
	Materials					219,760
c.	work in process-Making Deptt				112,070
	work in process-pcking Deptt				75,640
	Factory overhead -making Deptt				21,700
	Factory overhead -packing Deptt				38,910
	Wages payable					248,320
d.	Factory overhead -making Deptt				20,460
	Factory overhead -packing Deptt				16,900
	Accumulated Depreciation					37,360
e	Factory overhead -making Deptt				3,880
	Factory overhead -packing Deptt				1,550
	prepaid insurance					5,430
f.	work in process-Making Deptt				53,480
	work in process-pcking Deptt				59,090
	Factory overhead -making Deptt					53,480
	Factory overhead -packing Deptt					59,090
g.	work in process-packing department				323,330
	work in process-making department					323,330
h.	finished goods				508,870
	work in process-packing department					508,870
i.	cost of goods sold				510,730
	finished goods					510,730
2)	materials				21,890
	work in process -Making Department				6,490
	work in process-Packing Department				13,410
	finished goods				17,210
	t-Accounts
	materials
	opening	4,190	Requistioned		219,760
	purchases	237,460
	end bal	21,890
	work in process-making deptt
	opening	7,410
	DM	156,860	trfg -packing deptt		323,330
	DL	112,070
	OH applied	53,480
	end bal	6,490
	work in process-pcking deptt
	opening	9,660
	trfd making	323,330
	DM	54,560	finished goods		508,870
	DL	75,640
	OH applied	59,090
	end bal	13,410
	finished goods
	opening	19,070	cost of goods sold		510,730
	WIP-packing	508,870
	end bal	17,210
3)	Factory overhea-making department				1,300	Credit
	Factory overhead -packing department				470	Debit
	Factory overhead-making department
	indirect mt	6,140	WIP		53,480
	ind lab	21,700
	dep	20,460
	prepaid	3,880
			end bal		1,300
	Factory overhead-packing department
	indirect mt	2,200	WIP		59,090
	ind lab	38,910
	dep	16,900
	prepaid	1,550
	end bal	470