Question

Problem 4-17 Cost Flows (LO 4-1) 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: March 1 balance Work in Process-Refining Department 33,100 Completed and transferrel to Blending 155,600 80.200 486,000 Materials Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,000: direct labor. $3,600; and overhead, $21.500. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,900; and overhead cost applied to production, $105,000. 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, $626,000. (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, $632,000 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. $1,470,000. The Cost of Goods Sold was $660,000. < Prey 5 of 10 !!! Next >

On "Required 1" please do the 1-8 which is the a-g.

Answer 1

Solution 1:

DF Credit Journal Entries - Lubricants Inc. Event Particulars Debit a Work In Process - Refining department Dr $155,600.00 Work In Process - Blending department Dr $45,000.00 To Raw material inventory |(To record material used in production) $200,600.00 $80,200.00 $17,900.00 Work In Process - Refining department Dr Work In Process - Blending department Dr To Wages Payable (To record direct labor cost incurred) $98,100.00 C $626,000.00 Manufacturing overhead Dr To Accounts Payable $696,000.00 (To record manufacturing overhead incurred) d $486,000.00 $105,000.00 Work In Process - Refining department Dr Work In Process - Blending department Dr To Manufacturing overhead (To apply manufacturing overhead) $591,000.00 $632,000.00 $682,000.00 Te Work In Process - Blending department Dr To Work In Process - Refining department (Being units completed in refining transferred to Blending) $730,000.00 $730,000.00 Finished goods inventory Dr To Work In Process - Blending department (Being units completed in blending transferred to finished goods) g1 $1,470,000.00 Accounts receivables Dr To Sales Revenue (To record sales on account) $1,470,000.00 35 36 g2 $660,000.00 37 Cost of goods sold Dr To Finished goods inventory (To record cost of goods sold) $660,000.00 38 39 40 -406 (2) Sheet390 Sheet391 Sheet385 Sheet442

Solution 2:

MN | Particulars March 1 balance Raw materials inventory Debit Particulars $207,600.00 Material used Credit $200,600.00 March 31, balance $7,000.00 Particulars Credit Work In Process - Refining Debit . Particulars Completed and $33,100.00 transferred to Blending $155,600.00 $632,000.00 March 1 balance Material Direct labor Overhead $80,200.00 $486,000.00 March 31, balance Particulars Credit $122,900.00 Work In Process - Blending Debit Particulars Completed and transferred to Finished $59,000.00 Goods $632,000.00 $45,000.00 $730,000.00 March 1 balance Transferred from Refining Material Direct labor Overhead $17,900.00 $105,000.00 March 31, balance $128,900.00 Particulars March 1 balance Transferred from Blending Finished Goods Inventory Debit Particulars $22,000.00 Cost of goods sold $730,000.00 Credit $660,000.00 March 31, balance $92,000.00 Manufacturing overhead Debit Particulars $626,000.00 Overhead applied Particulars Overhead incurred Credit $591,000.00 March 31, balance $35,000.00 Cost of goods sold Debit Particulars $660,000.00 Particulars Finished goods inventory Credit March 31, balance $660,000.00 Particulars Sales Revenue Debit Particulars Accounts receivables 51 Credit $1,470,000.00 March 31, balance $1,470,000.00 54 -406 (2) Sheet390 Sheet391 Sheet385 Sheet442