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 $9,720 Work in Process—Making 3,780 Work in Process—Packing 4,920 Materials 2,130 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 $121,030 b. Materials requisitioned for use: Phosphate—Making Department $79,950 Packaging—Packing Department 27,810 Indirect materials—Making Department 3,130 Indirect materials—Packing Department 1,120 c. Labor used: Direct labor—Making Department $57,120 Direct labor—Packing Department 38,550 Indirect labor—Making Department 11,060 Indirect labor—Packing Department 19,830 d. Depreciation charged on fixed assets: Making Department $10,430 Packing Department 8,610 e. Expired prepaid factory insurance: Making Department $1,980 Packing Department 790 f. Applied factory overhead: Making Department $27,260 Packing Department 30,110 g. Production costs transferred from Making Department to Packing Department $164,790 h. Production costs transferred from Packing Department to Finished Goods $259,360 i. Cost of goods sold during the period $260,310 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. Factory Overhead—Making Department $ Factory Overhead—Packing Department $

Answer 1

Item	Account				Debit	Credit
a.	Materials				121,030
	Accounts payable					121,030
b.	work in process-Making Deptt				79,950
	work in process-pcking Deptt				27,810
	Factory overhead -making Deptt				3,130
	Factory overhead -packing Deptt				1,120
	Materials					112,010
c.	work in process-Making Deptt				57,120
	work in process-pcking Deptt				38,550
	Factory overhead -making Deptt				11,060
	Factory overhead -packing Deptt				19,830
	Wages payable					126,560
d.	Factory overhead -making Deptt				10,430
	Factory overhead -packing Deptt				8,610
	Accumulated Depreciation					19,040
e	Factory overhead -making Deptt				1,980
	Factory overhead -packing Deptt				790
	prepaid insurance					2,770
f.	work in process-Making Deptt				27,260
	work in process-pcking Deptt				30,110
	Factory overhead -making Deptt					27,260
	Factory overhead -packing Deptt					30,110
g.	work in process-packing department				164,790
	work in process-making department					164,790
h.	finished goods				259,360
	work in process-packing department					259,360
i.	cost of goods sold				260,310
	finished goods					260,310
2)
	materials				11,150
	work in process -Making Department				3,320
	work in process-Packing Department				6,820
	finished goods				8,770
	t-Accounts
	materials
	opening	2,130	Requistioned		112,010
	purchases	121,030
	end bal	11,150
	work in process-making deptt
	opening	3,780
	DM	79,950	trfg -packing deptt		164,790
	DL	57,120
	OH applied	27,260
	end bal	3,320
	work in process-pcking deptt
	opening	4,920
	trfd making	164,790
	DM	27,810	finished goods		259,360
	DL	38,550
	OH applied	30,110
	end bal	6,820
	finished goods
	opening	9,720	cost of goods sold		260,310
	WIP-packing	259,360
	end bal	8,770
3)
	Factory overhea-making department				660	Credit
	Factory overhead -packing department				240	Debit
	Factory overhead-making department
	indirect mt	3,130	WIP		27,260
	ind lab	11,060
	dep	10,430
	prepaid	1,980
			end bal		660
	Factory overhead-packing department
	indirect mt	1,120	WIP		30,110
	ind lab	19,830
	dep	8,610
	prepaid	790
	end bal	240