Question

Problem 4-17 Cost Flows (LO 4-1) 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: Work in Process-Refining Department Completed and transferred to Blending March 1 balance Materials Direct labor Overhead 32.400 139,600 68,200 489,000 March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,800; direct labor, $3,300; and overhead, $20,300. Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $16,800; and overhead cost applied to production, $102,000.

Answer 1

1	Transction	General journal					Debit	Credit
	a.	Work in process-Refining department					139600
		Work in process-Blending department					44000
		Raw Materials						183600
		(Direct materials used)
	b.	Work in process-Refining department					68200
		Work in process-Blending department					16800
		Salaries and wages payable						85000
		(Direct labor recorded)
	c.	Manufacturing overhead					636000
		Accounts payable						636000
		(Manufacturing overhead incurred)
	d.	Work in process-Refining department					489000
		Work in process-Blending department					102000
		Manufacturing overhead						591000
		(Factory overhead applied)
	e.	Work in process-Blending department					642000
		Work in process-Refining department						642000
		(Production cost transferred to blending department)
	f.	Finished goods					770000
		Work in process-Blending department						770000
		(Production cost transferred to finished goods)
	g(1).	Accounts receivable					1370000
		Sales						1370000
		(Units sold on account)
	g(2).	Cost of goods sold					680000
		Finished goods						680000
		(Cost of goods sold recorded)
2		Accounts receivable					Raw materials
	Beg. Bal.	0				Beg. Bal.	206600	183600	a.
	g(1).	1370000					206600	183600
		1370000	0			End. Bal.	23000
	End. Bal.	1370000
	Work in process-Refining department					Work in process-Blending department
	Beg. Bal.	32400	642000	e.		Beg. Bal.	48000	770000	f.
	a.	139600				a.	44000
	b.	68200				b.	16800
	d.	489000				d.	102000
		729200	642000			e.	642000
	End. Bal.	87200					852800	770000
						End. Bal.	82800
			Finished goods			Manufacturing overhead
	Beg. Bal.	12000	680000	g(2).		c.	636000	591000	d.
	f.	770000					636000	591000
		782000	680000			End. Bal.	45000
	End. Bal.	102000
			Accounts payable				Salaries and wages payable
			636000	c.				85000	b.
		0	636000					85000
			636000	End. Bal.				85000	End. Bal.
		Sales					Cost of goods sold
			1370000	g(1).		g(2).	680000
		0	1370000				680000	0
			1370000	End. Bal.		End. Bal.	680000
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