Question

Shamrock Industries uses process costing. All of the company's manufacturing activities take place in a single processing department. The following information was available for the month of June.

Direct materials	$	82,000
Direct labor		29,000
Manufacturing overhead applied		38,000
Total costs to account for in June	$	149,000

The amounts of work in process at the beginning and end of the month were immaterial and assigned no dollar value. During June, 13,250 units were completed, of which 10,000 were sold on account at $25 per unit.

a. Prepare a journal entry to summarize the total manufacturing costs applied to production in June.

b. Prepare the journal entry to transfer completed units from work in process to the finished goods warehouse in June.

c. Prepare the journal entries to record the sale of 10,000 units manufactured during the period and the related cost of goods sold.

Answer 1

Answer:

Sl. no.	Particulars	Debit ($)	Credit($)
1.	Work In Process Inventory	$149,000
	To Direct Materials		82,000
	To Direct Labor		29,000
	To Manufacturing Overhead		38,000
	( Being the entry for applying manufacturing costs to production)
2.	Finished Goods	$149,000
	To Work In Process Inventory		$149,000
	( Being the entry to transfer completed units of WIP to Finished Goods)
3. i.	Accounts Receivable	$250,000
	To Sales (10,000 units * $25)		$250,000
	( Being the entry to record the sale of 10,000 units )
3. ii	Sales (W.N.)	$112,453
	To Cost of Goods Sold		$112,453
	(Being the entry to record the cost of goods sold for sales).

Working Note:

Total units produced in June = 13,250

Total units sold = 10,000

Cost of goods sold = $149,000 * 10,000 ÷ 13,250 = 112,453 (approx.)