Question

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 Materials Direct labor Overhead March 31 balance Work in Process-Refining Department 33,600 Completed and transferred to Blending 141,600 74,200 490,000 ? The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,400; direct labor, $4,500; and overhead, $21,700. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $16,600; and overhead cost applied to production, $99,000.

Answer 1

1.

Transactions	General Journal	Debit	Credit
a.	Work in process-Refining department	141600
	Work in process-Blending department	45000
	Raw Materials		186600
	(To record direct materials used in production)
b.	Work in process-Refining department	74200
	Work in process-Blending department	16600
	Salaries and Wages payable		90800
	(To record direct labor costs incurred)
c.	Manufacturing overhead	696000
	Accounts Payable		696000
	(To record manufacturing overhead incurred)
d.	Work in process-Refining department	490000
	Work in process-Blending department	99000
	Manufacturing overhead		589000
	(To record manufacturing overhead applied)
e.	Work in process-Blending department	682000
	Work in process-Refining department		682000
	(To record transfers from Refining to Blending department)
f.	Finished goods	750000
	Work in process-Blending department		750000
	(To record goods completed and transferred to finished goods)
g.	Accounts receivable	1490000
	Sales		1490000
	(To record sales on account)
	Cost of goods sold	640000
	Finished goods		640000
	(To record cost of sales)

2.

Accounts Receivable					Raw Materials
	Debit	Credit				Debit	Credit
g.	1490000				Beg. Bal.	205600
							186600	a.
End. Bal.	1490000				End. Bal.	19000
Work in Process-Refining Department					Work in Process-Blending Department
	Debit	Credit				Debit	Credit
Beg. Bal.	33600				Beg. Bal.	53000
a.	141600	682000	e.		a.	45000	750000	f.
b.	74200				b.	16600
d.	490000				d.	99000
					e.	682000
End. Bal.	57400				End. Bal.	145600
Finished Goods					Manufacturing Overhead
	Debit	Credit				Debit	Credit
Beg. Bal.	28000				c.	696000	589000	d.
f.	750000	640000	g.
End. Bal.	138000				End. Bal.	107000
Accounts Payable					Salaries and Wages Payable
	Debit	Credit				Debit	Credit
		696000	c.				90800	b.
End. Bal.		696000			End. Bal.		90800
Sales					Cost of Goods Sold (COGS)
	Debit	Credit				Debit	Credit
		1490000	g.		g.	640000
End. Bal.		1490000			End. Bal.	640000