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	$26,570
Work in Process—Making	10,320
Work in Process—Packing	13,460
Materials	5,830

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		$330,910
b.	Materials requisitioned for use:
		Phosphate—Making Department	$218,590
		Packaging—Packing Department	76,030
		Indirect materials—Making Department	8,550
		Indirect materials—Packing Department	3,070
c.	Labor used:
		Direct labor—Making Department	$156,170
		Direct labor—Packing Department	105,410
		Indirect labor—Making Department	30,240
		Indirect labor—Packing Department	54,220
d.	Depreciation charged on fixed assets:
		Making Department	$28,510
		Packing Department	23,540
e.	Expired prepaid factory insurance:
		Making Department	$5,400
		Packing Department	2,160
f.	Applied factory overhead:
		Making Department	$74,520
		Packing Department	82,340
g.	Production costs transferred from Making Department to Packing Department		$450,580
h.	Production costs transferred from Packing Department to Finished Goods		$709,130
i.	Cost of goods sold during the period		$711,720

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. 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

Item	Account				Debit	Credit
a.	Materials				330,910
	Accounts payable					330,910
b.	work in process-Making Deptt				218,590
	work in process-pcking Deptt				76,030
	Factory overhead -making Deptt				8,550
	Factory overhead -packing Deptt				3,070
	Materials					306,240
c.	work in process-Making Deptt				156,170
	work in process-pcking Deptt				105,410
	Factory overhead -making Deptt				30,240
	Factory overhead -packing Deptt				54,220
	Wages payable					346,040
d.	Factory overhead -making Deptt				28,510
	Factory overhead -packing Deptt				23,540
	Accumulated Depreciation					52,050
e	Factory overhead -making Deptt				5,400
	Factory overhead -packing Deptt				2,160
	prepaid insurance					7,560
f.	work in process-Making Deptt				74,520
	work in process-pcking Deptt				82,340
	Factory overhead -making Deptt					74,520
	Factory overhead -packing Deptt					82,340
g.	work in process-packing department				450,580
	work in process-making department					450,580
h.	finished goods				709,130
	work in process-packing department					709,130
i.	cost of goods sold				711,720
	finished goods					711,720
2)
	materials				30,500
	work in process -Making Department				9,020
	work in process-Packing Department				18,690
	finished goods				23,980
	t-Accounts
	materials
	opening	5,830	Requistioned		306,240
	purchases	330,910
	end bal	30,500
	work in process-making deptt
	opening	10,320
	DM	218,590	trfg -packing deptt		450,580
	DL	156,170
	OH applied	74,520
	end bal	9,020
	work in process-pcking deptt
	opening	13,460
	trfd making	450,580
	DM	76,030	finished goods		709,130
	DL	105,410
	OH applied	82,340
	end bal	18,690
	finished goods
	opening	26,570	cost of goods sold		711,720
	WIP-packing	709,130
	end bal	23,980
3)
	Factory overhea-making department				1,820	Credit
	Factory overhead -packing department				650	Debit
	Factory overhead-making department
	indirect mt	8,550	WIP		74,520
	ind lab	30,240
	dep	28,510
	prepaid	5,400
			end bal		1,820
	Factory overhead-packing department
	indirect mt	3,070	WIP		82,340
	ind lab	54,220
	dep	23,540
	prepaid	2,160
	end bal	650