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Lubricants, Inc.. produces a special kind of grease that is widely used by race car drivers. The grease is produced in two pr


a. Raw materials used in production. b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire
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Answer #1

Solution 1:

Journal Entries - Lubricants Inc.
Event Particulars Debit Credit
a Work In Process - Refining department Dr $4,95,000.00
Work In Process - Blending department Dr $1,15,000.00
       To Raw material inventory $6,10,000.00
(To record material used in production)
b Work In Process - Refining department Dr $72,000.00
Work In Process - Blending department Dr $18,000.00
       To Wages Payable $90,000.00
(To record direct labor cost incurred)
c Manufacturing overhead Dr $2,25,000.00
       To Accounts Payable $2,25,000.00
(To record manufacturing overhead incurred)
d Work In Process - Refining department Dr $1,81,000.00
Work In Process - Blending department Dr $42,000.00
       To Manufacturing overhead $2,23,000.00
(To apply manufacturing overhead)
e Work In Process - Blending department Dr $7,40,000.00
       To Work In Process - Refining department $7,40,000.00
(Being units completed in refining transferred to Blending)
f Finished goods inventory Dr $9,50,000.00
       To Work In Process - Blending department $9,50,000.00
(Being units completed in blending transferred to finished goods)
g1 Accounts receivables Dr $15,00,000.00
       To Sales Revenue $15,00,000.00
(To record sales on account)
g2 Cost of goods sold Dr $9,00,000.00
       To Finished goods inventory $9,00,000.00
(To record cost of goods sold)

Solution 2:

Raw materials inventory
Particulars Debit Particulars Credit
March 1 balance $6,18,000.00 Material used $6,10,000.00
March 31, balance $8,000.00
Work In Process - Refining
Particulars Debit Particulars Credit
March 1 balance $38,000.00 Completed and transferred to Blending $7,40,000.00
Material $4,95,000.00
Direct labor $72,000.00
Overhead $1,81,000.00
March 31, balance $46,000.00
Work In Process - Blending
Particulars Debit Particulars Credit
March 1 balance $65,000.00 Completed and transferred to Finished Goods $9,50,000.00
Transferred from Refining $7,40,000.00
Material $1,15,000.00
Direct labor $18,000.00
Overhead $42,000.00
March 31, balance $30,000.00
Finished Goods Inventory
Particulars Debit Particulars Credit
March 1 balance $20,000.00 Cost of goods sold $9,00,000.00
Transferred from Blending $9,50,000.00
March 31, balance $70,000.00
Manufacturing overhead
Particulars Debit Particulars Credit
Overhead incurred $2,25,000.00 Overhead applied $2,23,000.00
March 31, balance $2,000.00
Cost of goods sold
Particulars Debit Particulars Credit
Finished goods inventory $9,00,000.00
March 31, balance $9,00,000.00
Sales Revenue
Particulars Debit Particulars Credit
Accounts receivables $15,00,000.00
March 31, balance $15,00,000.00
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