Question

Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enterproduction at the beginning of the cutting process. The following information is available regarding its May inventories.

Raw materials inventory

Work in process inventory Cutting

Work in process inventory Stitching

 

Beginning

Ending

Inventory

Inventory

$ 76, 090

$ 91, 750

183, 508

130,590

203,360

103,968

36, 250

 

Finished goods inventory

48, 100

The following additional information describes the company's production activities for May.

Direct materials

95, 090

Direct materials used Cutting

25,258

Direct materials used Stitching

 

Direct labor

Direct labor-Cutting

$ 22,600

Direct labor-Stitching

90, 400

Factory Overhead (Actual costs)

Indirect materials us

$ 54, 608

Indirect labor used

57 , 808

Other overhead costs

 

61, 809

150% of direct materials used

120% of direct labor used

$ 816, 808

 

Factory Overhead Rates

Cutting

Stitching

Sales

Required:

1. Compute the amount of (a) production costs transferred from Cutting to Stitching, (b) production costs transferred from Stitching to

goods, and (c) cost of goods sold. Hint Compute the total production costs in each department and then subtract the ending

inventory to get the amount transferred out of each department

 

(a) Transferred to work in process-Stitching

(b) Transferred to finished goods

[c) Cost of goods sold

Journal entry worksheet

<

1

2

3

4

5

6

 

7

8 .....

11

 

Record purchase of raw materials.

Note: Enter debits before credits

Date

General Journal

May 31

 

Debit

 

Credit

 

Record entry

 

Clear entry

 

View general journal

Answer 1

Explanation:
	Cost of goods transferred to finished goods and cost of goods sold
(a)	Beginning work in process inventory—Cutting	$                 183,500
	Direct materials used in production	$                   25,250
	Direct labor used in production	$                   22,600
	Overhead applied	$                   37,875	(25250 * 150%)
	Total production costs	$                 269,225
	Less ending work in process inventory—Cutting	$               (130,500)
	Transferred to work in process—Stitching (a)	$                 138,725
(b)	Beginning work in process inventory—Stitching	$                 203,300
	Transferred-in from Cutting	$                 138,725
	Direct materials used in production	$                            -
	Direct labor used in production	$                   90,400
	Overhead applied	$                 108,480	(90400 * 120%)
	Total production costs	$                 540,905
	Less ending work in process inventory—Stitching	$               (103,900)
	Transferred to finished goods (b)	$                 437,005
(c)	Beginning finished goods inventory	$                   48,100
	Transferred-in from Stitching	$                 437,005
	Cost of goods available for sale	$                 485,105
	Less ending finished goods inventory	$                 (36,250)
	Cost of goods sold (c)	$                 448,855

Req 2:
No	Date	General Journal	Debit	Credit	Working:
1	May-31	Raw materials inventory	$                   95,000
		Accounts payable		$                    95,000
		(To record purchase of material on credit)
2	May-31	Work in process inventory—Cutting	$                   25,250
		Raw materials inventory		$                    25,250
		(To record direct material use in cutting)
3	May-31	Factory overhead	$                   54,000
		Raw materials inventory		$                    54,000
		(To record indircet material use)
4	May-31	Work in process inventory—Cutting	$                   22,600
		Work in process inventory—Stitching	$                   90,400
		Factory wages payable		$                 113,000
		(To record dircet labor used)
5	May 31.	Factory overhead	$                   57,800
		Factory wages payable		$                    57,800
		(To record indirect labor used)
6	May-31	Factory overhead	$                   61,000
		Cash		$                    61,000
		(To record factory overhead exp incurred)
7	May-31	Work in process inventory—Cutting	$                   37,875		(25250 * 150%)
		Work in process inventory—Stitching	$                 108,480		(90400 * 120%)
		Factory overhead		$                 146,355
		(To record application of overhead)
8	May-31	Work in process inventory—Stitching	$                 138,725		(Req 1a:)
		Work in process inventory—Cutting		$                 138,725
		(To record inventory transfer from cutting to stiching)
9	May-31	Finished goods inventory	$                 437,005		(Req 1b:)
		Work in process inventory—Stitching		$                 437,005
		(To record finished goods inventory produced)
10	May-31	Accounts receivable	$                 816,000
		Sales		$                 816,000
		(To record sales revenue)
11	May-31	Cost of goods sold	$                 448,855		(Req 1c:)
		Finished goods inventory		$                 448,855
		(To record cost of goods sold)