Question

Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments-Refining and Blending. Raw materials are introduced at various points in the Refining Department. The following incomplete Work in Process account is available for the Refining Department for March: Work in Process-Refining Department March 1 balance 33,300 Completed and transferred to Blending Materials 154,600 Direct labor 68,200 Overhead 474,000 March 31 balance ? The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,500; direct labor, $4,600; and overhead, $21,200. Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $16,600; and overhead cost applied to production, $113,000. Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below. a. Raw materials used in production. b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire factory, $706,000. (Credit Accounts Payable.) d. Manufacturing overhead was applied to production using a predetermined overhead rate. e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $682,000. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $730,000. g. Completed units were sold on account, $1,310,000. The Cost of Goods Sold was $610,000. 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 Refining Department's Work in Process is given in the T-account shown above.) Raw materials $210,600 Work in process-Blending $ 51.000 Department Finished goods $ 21,000

Answer 1

No credit 1.Journal entries : General Journal work in process inventory - refining work in process inventory - blending raw material inventory debit 154,600 46,000 200,600 b work in process inventory-refining work in process inventory - blending salaries and wages payable 68,200 16, 600 84.800 706,000 manufacturing overhead accounts payable 706,000 work in process inventory - refining work in process inventory - blending manufacturing overhead 474,000 113,000 587,000 682,000 work in process inventory - blending work in process inventory - refining 682,000 730,000 finished goods inventory work in process inventory - blending 730,000 1,310,000 account receivable sales 1,310,000 610,000 cost of goods sold finished goods inventory 610,000

2.T Accounts Raw Materials inventory Beg bal 210,600 200,600 end bal 10,000 manufacturing overhead Beg bal 706,000 587,000 end bal 119,000 work in in Process inventory - Refining beg bal 33,300 682,000 e 154,600 68,200 474,000 account receivable 1,310,000 b end bal 48,100 end bal | 1,310,000 work in in Process inventory - Blending beg bal 51,000 46,000 730,000 16,600 113,000 682,000 end bal 178,600 accounts payable 706,000 b end bal 706,000 beg bal Finished Goods inventory 21,000 f730,000 610,000 end bal 141,000 salaries and wages payable Beg bal. 84,800 end bal 84,800 sales 1,310,000 end bal 1,310,000 cost of goods sold 610,000 610,000 end bal