Question

Instruction A firm produces its products by a continuous process involving three production departments, 1 through 3. Following are the selected transactions related to production during August: (a) Materials purchased on account, $120,000 (b) Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product (c) Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product (d) Factory overhead costs for Department 1 incurred on account, $54,700 (c) Depreciation on machinery in Department 1, $29,200 (1) Expiration of prepaid insurance chargeable to Department 1, $7,000 (g) Factory overhead applied to production in Department 1, $106,300 th) Output of Department 1 transferred to Department 2. $362,700 Required: Present entries to record the selected transactions related to production during August Refer to the Chart of Accounts for exact wording of account titles

Answer 1

Credit Remarks and Workings Event a) Debit $120,000 $120,000 |(To record raw materials purchased on account) b) $124,200 $1,500 ($125700 - $124200] (To record materials issued to production) $125,700 $174,000 $21,400 $195,400 General Journal Raw Materials Inventory Accounts Payable Work in Process Inventory-Dept. 1 Manufacturing overhead Raw Materials Inventory Work in Process Inventory-Dept.1 Manufacturing overhead Cash Manufacturing overhead Accounts Payable Manufacturing overhead Accumulated depreciation Manufacturing overhead Prepaid Insurance Work in Process Inventory-Dept.1 Manufacturing overhead Work in Process Inventory-Dept.2 Work in Process Inventory-Dept.1 [$195400 - $174000] (To record labor cost incurred) |(To record Manufacturing overhead costs incurred $54,700 $54,700 $29,200 $29,200 [To record depreciation on Manufacturing machinery] $7,000 $7,000 [To record prepaid insurance expired chargeable to department] $106,300 $106,300 |(To record mfg. overhead applied to production) h) $362,700 $362,700 (To record cost of goods completed and trfd. to department-2)