Question

Pro-Weave manufactures stadium blankets by passing the products through a weaving department and a sewing department. The following information is available regarding its June inventories:

	Beginning Inventory			Ending Inventory
Raw materials inventory	$	182,000		$	257,000
Work in process inventory—Weaving		385,000			390,000
Work in process inventory—Sewing		700,000			795,000
Finished goods inventory		1,306,000			1,246,000

The following additional information describes the company’s manufacturing activities for June:

Raw materials purchases (on credit)	$	560,000
Factory payroll cost (paid in cash)		3,260,000
Other factory overhead cost (Other Accounts credited)		198,000
Materials used
Direct—Weaving	$	242,000
Direct—Sewing		141,000
Indirect		178,000
Labor used
Direct—Weaving	$	1,350,000
Direct—Sewing		375,000
Indirect		1,675,000
Overhead rates as a percent of direct labor
Weaving		85	%
Sewing		165	%
Sales (on credit)	$	4,600,000

1. Compute the (a) cost of products transferred from weaving to sewing, (b) cost of products transferred from sewing to finished goods, and (c) cost of goods sold.
2. Prepare journal entries dated June 30 to record (a) goods transferred from weaving to sewing, (b) goods transferred from sewing to finished goods, (c) sale of finished goods, and (d) cost of goods sold.

Part 1

A Sewing ______

B. Finished Goods ______

C. Cost of goods sold _____

Answer 1

1)

a)
Beginning Work-in process inventory - Weaving	$385,000
Add: Direct materials used	$242,000
Add: Direct labor	$1,350,000
Add: Overheads ($1,350,000*85/100)	$1,147,500
Less: Ending work-in process inventory - Weaving	($390,000)
Cost of products transferred from Weaving to Sewing	$2,734,500
b)
Beginning Work-in process inventory - Sewing	$700,000
Add: Cost of products transferred from Weaving to Sewing	$2,734,500
Add: Direct materials used	$141,000
Add: Direct labor	$375,000
Add: Overheads ($375,000*165/100)	$618,750
Less: Ending work-in process inventory - Sewing	($795,000)
Cost of products transferred from Sewing to Finished Goods	$3,774,250
c)
Cost of products transferred from Sewing to Finished Goods	$3,774,250
Add: Indirect materials	$178,000
Add: Indirect labor	$1,675,000
Add: Finished goods inventory	$1,306,000
Less: Finished goods inventory	($1,246,000)
Cost of Goods Sold	$5,687,250

2)

Date	Accounts Titles and Explanations	Debit	Credit
a)	Work-in Process Inventory - Sewing	$2,734,500
	Work-in Process Inventory - Weaving		$2,734,500
	(To record the transfer of costs from weaving to sewing)
b)	Finished Goods Inventory	$3,774,500
	Work-in Process Inventory - Sewing		$3,774,500
	(To record the transfer of costs from sewing to finished goods)
c)	Cost of Goods Sold	$5,687,250
	Finished Goods Inventory		$5,687,250
	(To record the cost of goods sold)

Part 1

A) Sewing - $2,734,500

B) Finished Goods - $3,774,500

C) Cost of Goods Sold - $5,687,250