Question

Pure Botanicals, Inc. keeps one of its production facilities busy making a perfume called Lily of the Valley. The perfume goes through two processing departments: Blending and Bottling. The following incomplete Work in Process account is provided for the Blending Department for March: Work in Process—Blending   March 1 balance 36,890     Completed and transferred        to Bottling (760,000 ounces) ?          Materials 154,400        Direct labor 74,800        Overhead 523,600     March 31 balance ?        The $36,890 beginning inventory in the Blending Department consisted of the following elements: materials, $7,720; direct labor, $2,990; and overhead applied, $26,180. Costs incurred during March in the Bottling Department were: materials used, $42,000; direct labor, $19,000; and overhead cost applied to production, $114,000. Required: 1. Prepare journal entries to record the costs incurred in both the Blending Department and Bottling Department during March. Key your entries to items (a) through (g) below: a. Raw materials were issued for use in production. b. Direct labor costs were incurred. c. Manufacturing overhead costs for the entire factory were incurred, $788,000. (All the overheads are on account and use a single Manufacturing Overhead control account for the entire factory.) d. Manufacturing overhead was applied to production using a predetermined overhead rate. e. Units that were complete with respect to processing in the Blending Department were   transferred to the Bottling Department, $650,000. f. Units that were complete with respect to processing in the Bottling Department were   transferred to Finished Goods, $780,000. g. Completed units were sold on account for $1,396,000. The cost of goods sold was $658,000. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Blending Department’s Work in Process account is given above.)   Raw materials $ 212,800   Work in process-Bottling department $ 45,500   Finished goods $ 12,000 After posting the entries to the T-accounts, find the ending balances in the inventory accounts and the manufacturing overhead account.

Accounts Receivable Raw Materials Beg. bal. Beg. bal. End. bal. End. bal. Work in Process - Blending Department Work in Process - Bottling Department Beg. bal. Beg. bal. End. bal. End. bal. Finished Goods Manufacturing Overhead Beg. bal. Beg. bal. End. bal. End. bal. Accounts Payable Salaries and Wages Payable Beg. bal. Beg. bal. End. bal. End. bal. Sales Cost of Goods Sold Beg. bal. Beg. bal. End. bal. End. bal.

Answer 1

1.

No.	Account Titles and Explanation	Debit	Credit
a.	Work in process-Blending department	154400
	Work in process-Bottling department	42000
	Raw Materials inventory		196400
	(To record direct materials used in production)
b.	Work in process-Blending department	74800
	Work in process-Bottling department	19000
	Wages payable		93800
	(To record direct labor costs incurred)
c.	Manufacturing overhead	788000
	Accounts Payable		788000
	(To record manufacturing overhead incurred)
d.	Work in process-Blending department	523600
	Work in process-Bottling department	114000
	Manufacturing overhead		637600
	(To record manufacturing overhead applied)
e.	Work in process-Bottling department	650000
	Work in process-Blending department		650000
	(To record transfers from Blending to Bottling department)
f.	Finished goods inventory	780000
	Work in process-Bottling department		780000
	(To record goods completed and transferred to finished goods)
g.	Accounts receivable	1396000
	Sales revenue		1396000
	(To record sales on account)
	Cost of goods sold	658000
	Finished goods inventory		658000
	(To record cost of sales)

2.

Accounts Receivable					Raw Materials
	Debit	Credit				Debit	Credit
Beg. Bal.					Beg. Bal.	212800
g.	1396000						196400	a.
End. Bal.	1396000				End. Bal.	16400
Work in Process-Blending Department					Work in Process-Bottling Department
	Debit	Credit				Debit	Credit
Beg. Bal.	36890				Beg. Bal.	45500
a.	154400	650000	e.		a.	42000	780000	f.
b.	74800				b.	19000
d.	523600				d.	114000
					e.	650000
End. Bal.	139690				End. Bal.	90500
Finished Goods					Manufacturing Overhead
	Debit	Credit				Debit	Credit
Beg. Bal.	12000				c.	788000	637600	d.
f.	780000	658000	g.
End. Bal.	134000				End. Bal.	150400
Accounts Payable					Wages Payable
	Debit	Credit				Debit	Credit
Beg. Bal.					Beg. Bal.
		788000	c.				93800	b.
End. Bal.		788000			End. Bal.		93800
Sales					Cost of Goods Sold
	Debit	Credit				Debit	Credit
Beg. Bal.					Beg. Bal.
		1396000	g.		g.	658000
End. Bal.		1396000			End. Bal.	658000