Question

[The following information applies to the questions displayed below.] Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories Beginning Inventory Ending Inventory Raw materials inventory $ 62,000 $ 136,500 Work in process inventory 400,500 549,000 Finished goods inventory 618,000 579,000 The following additional information describes the company's production activities for May. Raw materials purchases (on credit) $ 290,000 Factory wages cost (paid in cash) 1,574,000 Other overhead cost (Other Accounts credited) 64,500 Materials used Direct $ 155,500 Indirect 60,000 Labor used Direct $ 790,000 Indirect 784,000 Overhead rate as a percent of direct labor 115 % Sales (on credit) $ 3,500,000 The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost. rev: 09_05_2017_QC_CS-97362 2. Prepare summary journal entries dated May 31 to record the following production activities during May: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) direct labor costs incurred, (e) indirect labor costs incurred, (f) payment of factory payroll, (g) other overhead costs, (h) overhead applied, (i) goods transferred from production to finished goods, and (j) sale of finished goods.

Answer 1

		Debit	Credit
31-May	Raw materials inventory	290000
	Accounts payable		290000
31-May	Goods in process inventory	155500
	Raw materials inventory		155500
31-May	Factory overhead	60000
	Raw materials inventory		60000
31-May	Goods in process inventory	790000
	Factory wages payable		790000
31-May	Factory overhead	784000
	Factory wages payable		784000
31-May	Factory wages payable	1574000
	Cash		1574000
31-May	Factory overhead	64500
	Other accounts		64500
31-May	Goods in process inventory	908500
	Factory overhead		908500
31-May	Finished goods inventory	1705500
	Goods in process inventory		1705500
31-May	Accounts receivable	3500000
	Sales		3500000
31-May	Cost of goods sold	1744500
	Finished goods inventory		1744500
	Workings:
	Beginning goods in process inventory	400500
	Direct materials used in production	155500
	Direct labor used in production	790000
	Overhead applied (115% of direct labor cost)	908500
	Total production costs	2254500
	Less ending goods in process inventory	549000
	Transferred to finished goods inventory	1705500
	Beginning finished goods inventory	618000
	Plus goods transferred from production	1705500
	Goods available for sale	2323500
	Less ending finished goods inventory	579000
	Cost of goods sold	1744500