Question

Required information Problem 16-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 [The following information applies to the questions displayed below.) Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the Cutting process. The following information is available regarding its May inventories: Raw materials inventory Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory and Beginning Inventory $ 36,000 103,500 123,300 32,100 Ending Inventory $42,550 90,500 79,100 20, 250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-stitching $ 55,000 23,250 Direct labor Direct labor-Cutting Direct labor-stitching Total factory payroll paid (in cash) $18.600 74.400 149,200 Factory Overhead (Actual costs) Indirect materials used Indirect laborused Other overhead costs $ 25, 200 56,200 53,000 Factory Overhead Rates Cutting (1501 of direct materials used) Stitching (1201 of direct laborused) Sales $496,000

Answer 1

Credit 34 35 36 Date Account Title & Explanation 31-May Raw Materials Inventory Accounts Payable Debit 55,000 55,000 37 38 23,250 39 31-May Work in Process Inventory-Cutting Raw Materials Inventory 23,250 40 25,200 31-May Factory Overhead Raw Materials Inventory 42 25,200 43 44 45 46 31-May Work in Process Inventory-Cutting Work in Process Inventory -Stitching Factory Wages Payable 18,600 74,400 93,000 47 56,200 48 49 50 31-May Factory Overhead Factory Wages Payable 56,200 51 149,200 31-May Factory Wages Payable Cash 149,200 52 53 54 53,000 31-May Factory Overhead Other Accounts 55 53,000

57 31-May Work in Process Inventory-Cutting Work in Process Inventory -Stitching Factory Overhead 34,875 89,280 124,155 89,725 (103500+23250+18600+34875-90500) 62 31-May Work in Process Inventory -Stitching Work in Process Inventory-Cutting 89,725 63 64 297,605 (123300+89725+89280+74400-79100) 31-May Finished Goods Inventory Work in Process Inventory -Stitching 65 297,605 309,455 (297605+32100-20250) 31-May Cost of Goods Sold Finished Goods Inventory 309,455 67 68 69 70 71 496,000 31-May Accounts Receivable Sales 496,000

Work In Process (WIP) -Stitching 123300 WIP-FG 297,605 Cash WIP - April 30 Direct Material-Stitching Direct Labor-Stitching Factory Overhead-Stitching WIP-Cutting WIP-May 31 Factory Wages Payable 149,200 Factory Wages Payable - April 30 WIP-Cutting WIP -Stitching Factory Overhead Factory Wages Payable - May 31 18,600 74,400 56,200 74,400 89,280 89,725 79,100 Finished Goods (FG) 32,100 Cost of Goods Sold 297,605 FG - April 30 Work in Process Inventory -Stitching 309,455 Raw Material Factory Wages Payable Other Accounts Factory Overhead 25,200 WIP -Cutting 56,200 WIP-Stitching 53,000 34,875 89,280 FG-May 31 20,250 Factory Overhead -May 31 10,245 95

109 112 113 Sierra Company Cost of Goods Manufactured Direct materials used 23,250 Direct labor 93,000 Factory Overhead 124,155 Total manufacturing costs added during the May Beginning Work in process inventory Total cost of work in Process Less Ending work in process inventory Cost of goods manufactured 115 116 240,405 226,800 467,205 169,600 297,605 117 119 120 121 122 123 Sierra Company Cost of Goods Sold Beginning Finished Goods Inventory 32,100 Cost of Goods Manufactured 297,605 Cost of Goods Available for sale 329,705 Less Ending Finished Goods Inventory 20,250 Cost of goods Sold 309,455 124 127 Income Statement -Partial 129 Sales Cost of Goods Sold Gross Profit 496,000 309,455 186,545 130 131