Question

Lamont Company produced 80,000 machine parts for diesel engines. There were no beginning or ending work-in-process inventories in any department. Lamont incurred the following costs for May:

		Molding Department		Grinding Department		Finishing Department
Direct materials		$12,000		$5,400		$8,000
Direct labor		10,000		8,800		12,000
Applied overhead		17,000		14,000		11,000

Required:

1. Calculate the costs transferred out of each department.

	Costs Transferred Out
Molding	$
Grinding	$
Finishing	$

Prepare the journal entries corresponding to these transfers. Also, prepare the journal entry for Grinding that reflects the costs added to the transferred-in goods received from Molding. For a compound transaction, if an amount box does not require an entry, leave it blank.

Transfer entries:	Work in Process-Grinding
	Work in Process-Molding
	Work in Process-Finishing
	Work in Process-Grinding
	Finished Goods
	Work in Process-Finishing
Cost-added entry (Grinding only):	Work in Process-Grinding
	Materials
	Payroll
	Overhead Control

Answer 1

1.

	Molding Department	Grinding Department	Finishing Department
Direct materials	$            12,000	$            5,400	$            8,000
Direct labor	$            10,000	$            8,800	$          12,000
Applied overhead	$         1,70,000	$          14,000	$          11,000
Costs added	$        1,92,000	$         28,200	$         31,000
Costs transferred in		$      1,92,000	$      2,20,200
Costs transferred out	$        1,92,000	$      2,20,200	$      2,51,200

2.

	Account Titles	Debit	Credit
1	Work in Process-Grinding	$         1,92,000
	Work in Process-Molding		$      1,92,000
2	Work in Process-Finishing	$         2,20,200
	Work in Process-Grinding		$      2,20,200
3	Finished Goods	$         2,51,200
	Work in Process-Finishing		$      2,51,200

Account Titles	Debit	Credit
Work in Process-Grinding	$            28,200
Materials		$            5,400
Payroll		$            8,800
Overhead Control		$          14,000