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: $23,490 Finished Goods 9,130 Work in Process-Making 11,900 Work in Process-Packing 5,160 Materials Departmental accounts are maintained for factory overhead, which both have zero balances on July 1 Manufacturing operations for July are summarized as follows: $292,610 a. Materials purchased on account b. Materials requisitioned for use: $193,290 Phosphate-Making Department 67,230 Packaging-Packing Department 7,560 Indirect materials-Making Department 2,710 Indirect materials-Packing Department c. Labor used: $138,090 Direct labor-Making Department 93,210 Direct labor-Packing Department 26,740 Indirect labor-Making Department 47,940 Indirect labor-Packing Department d. Depreciation charged on fixed assets: $25,210 Making Department 20,820 Packing Department e. Expired prepaid factory insurance: $4,780 Making Department 1,910 Packing Department f. Applied factory overhead: $65,900 Making Department 72,810 Packing Department $398,430 g. Production costs transferred from Making Department to Packing Department $627,050 h. Production costs transferred from Packing Department to Finished Goods $629,350 I. Cost of goods sold during the period 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 Credit Debit Item Account a.

Answer 1

a)	Material	$      292,610
	Accounts Payable		$       292,610
	Material purchased on account
b)	Work in Process -Making	$      193,290
	Work in Process -Packing	$        67,230
	Factory Overhead -Making Department	$          7,560
	Factory Overhead -Packing Department	$          2,710
	Material		$       270,790
	Material requistioned for direct and indirect use
c)	Work in Process -Making	$      138,090
	Work in Process -Packing	$        93,210
	Factory Overhead -Making Department	$        26,740
	Factory Overhead -Packing Department	$        47,940
	Labour Cost		$       305,980
	Labour used for direct and indirect purpose
d)	Factory Overhead -Making Department	$        25,210
	Factory Overhead -Packing Department	$        20,820
	Depreciation Expense		$         46,030
	Depreciation charged on fixed assets trasfered to factory overhead
e)	Factory Overhead -Making Department	$          4,780
	Factory Overhead -Packing Department	$          1,910
	Insurance Expense		$            6,690
	expired prepaid insurance trasfered to factory overhead
f)	Work in Process -Making	$        65,900
	Work in Process -Packing	$        72,810
	Factory Overhead -Making Department		$         65,900
	Factory Overhead -Packing Department		$         72,810
	Factory overhead applied
g)	Work in Process -Packing	$      398,430
	Work in Process -Making		$       398,430
	Production cost transferred from making to packing department
h)	Finished Goods	$      627,050
	Work in Process -Packing		$       627,050
	Production cost transferred from packing to finised goods
i)	Cost of goods sold	$      629,350
	Finished Goods		$       629,350
	Cost of goods sold during the period
2)
	Materials	$        26,980	(Opening material +purchased -material used)	=5160+292610-270790
	Work in Process -Making	$          7,980	(opening balance+ cost trasfered in-cost trasfered out)	=9130+193290+138090+65900-398430
	Work in Process -Packing	$        16,530	(opening balance+ cost trasfered in-cost trasfered out)	=11900+67230+93210+72810+398430-627050
	Finished Goods	$        21,190	(opening balance+ fisnished goods produced-cost of goods sold)	=23490+627050-629350
3)	Factory Overhead -Making Department	$        (1,610)		=7560+26740+25210+4780-65900	Overapplied
	Factory Overhead -Packing Department	$              570		=2710+47940+20820+1910-72810	Underapplied