Question

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	$7,200
Work in Process-Spinning Department	1,000
Work in Process-Tufting Department	2,400
Materials	4,300

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, $80,000
	2	Materials requisitioned for use:
		Fiber—Spinning Department, $42,000
		Carpet backing—Tufting Department, $34,600
		Indirect materials—Spinning Department, $3,000
		Indirect materials—Tufting Department, $2,900
	31	Labor used:
		Direct labor—Spinning Department, $26,900
		Direct labor—Tufting Department, $17,800
		Indirect labor—Spinning Department, $11,700
		Indirect labor—Tufting Department, $11,800
	31	Depreciation charged on fixed assets:
		Spinning Department, $5,300
		Tufting Department, $3,500
	31	Expired prepaid factory insurance:
		Spinning Department, $1,300
		Tufting Department, $1,000
	31	Applied factory overhead:
		Spinning Department, $21,500
		Tufting Department, $18,850
	31	Production costs transferred from Spinning Department to Tufting Department, $85,000
	31	Production costs transferred from Tufting Department to Finished Goods, $152,600
	31	Cost of goods sold during the period, $155,300

	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 exact wording of account titles.
2.	Compute the January 31 balances of the inventory accounts.
3.	Compute the January 31 balances of the factory overhead accounts.

Answer 1

1. In the books of Port Ormond Carpet Company:

Date	Account Titles	Debit	Credit
		$	$
Jan 1	Materials Inventory	80,000
	Accounts Payable		80,000
Jan 2	Work in Process : Spinning	42,000
	Work in Process: Tufting	34,600
	Factory Overhead : Spinning	3,000
	Factory Overhead : Tufting	2,900
	Materials Inventory		82,500
Jan 31	Work in Process : Spinning	26,900
	Work in Process : Tufting	17,800
	Factory Overhead: Spinning	11,700
	Factory Overhead : Tufting	11,800
	Wages Payable		68,200
Jan 31	Factory Overhead : Spinning	5,300
	Factory Overhead : Tufting	3,500
	Accumulated Depreciation		8,800
Jan 31	Factory Overhead : Spinning	1,300
	Factory Overhead : Tufting	1,000
	Prepaid Insurance		2,300
Jan 31	Work in Process: Spinning	21,500
	Factory Overhead : Spinning		21,500
Jan 31	Work in Process: Tufting	18,850
	Factory Overhead : Tufting		18,850
Jan 31	Work in Process: Tufting	85,000
	Work in Process: Spinning		85,000
Jan 31	Finished Goods	152,600
	Work in Process: Tufting		152,600
Jan 31	Cost of Goods Sold	155,300
	Finished Goods		155,300

2. Jan 31 balances of inventory accounts:

Finished Goods	$ 4,500
Work in Process: Spinning Department	6,400
Work in Process: Tufting Department	6,050
Materials	1,800

3. January 31 balances of factory overhead:

Factory Overhead: Spinning Department	$ 200 Cr.
Factory Overhead: Tufting Department	$ 350 Dr.