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	$23,250
Work in Process—Making	9,030
Work in Process—Packing	11,770
Materials	5,100

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		$289,550
b.	Materials requisitioned for use
		Phosphate—Making Department	$191,270
		Packaging—Packing Department	66,530
		Indirect materials—Making Department	7,480
		Indirect materials—Packing Department	2,680
c.	Labor used
		Direct labor—Making Department	$136,650
		Direct labor—Packing Department	92,230
		Indirect labor—Making Department	26,460
		Indirect labor—Packing Department	47,440
d.	Depreciation charged on fixed assets
		Making Department	$24,950
		Packing Department	20,600
e.	Expired prepaid factory insurance
		Making Department	$4,730
		Packing Department	1,890
f.	Applied factory overhead
		Making Department	$65,210
		Packing Department	72,050
g.	Production costs transferred from Making Department to Packing Department		$394,250
h.	Production costs transferred from Packing Department to Finished Goods		$620,490
i.	Cost of goods sold during the period		$622,760

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. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$
Factory Overhead—Packing Department	$

Answer 1

B A 1 Date Account title Raw material inventory Accounts payable C D Debit credit 2895501 289550 4 5 b 6 7 Work in process-making Work in process-Packing Factory overhead -Making Factory overhead -pacling Raw material inventory 191270 66530 7480|| 2680 267960 10 11 12 Work in process-making Work in process-Packing Factory overhead -Making Factory overhead -pacling Factory labor 136650 922301 26460 47440 13 302780 14 15 16 17 24950 20600 18 Factory overhead -making Factory overhead -packing Accumulated depreciation - fixed asset 455501 20 21 Factory overhead -making Factory overhead -packing Prepaid insurance 4730 1890 23 6620 24

65210 72050 work in process-making work in process-packing Factory overhead-making Factory overhead -packing 65210 72050 394250 WOrk in process -packing work in process-making 394250 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 620490 Finished goods inventory work in process-packing 620490 622760 cost of goods sold Finished goods inventory 622760 41

Material=Beginning+purchase-ending = 5100+289550-267960 = 31630 Work in process- making=Beginning +current month cost-ending = 9030+[191270+136650+77280]-394250 = 9030 +405200-394250 = 19980 Work in process -packing=11770+ [66530+92230+720501+394250-620490 = 11770+230810+394250-620490 = 16340 Finished goods = beginning + transferred from packing - cost of goods sold = 23250+620490-622760 = 20980 3) Factory overhead = Actual -applied = [7480+26460+24950+4730]-65210 = 63620-65210 =-1590 Factory overhead -packing=[2680+47440+20600+1890)-72050 = 72610-72050 = 560