Question

You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $20,000; Work in Process Inventory, $10,010 ($2,710 of direct materials and $7,300 of conversion); Finished Goods Inventory, $120,000; Sales, $0; Cost of Goods Sold, $0; Factory Wages Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July transactions and events.

1. Purchased raw materials for $120,000 cash (the company uses a perpetual inventory system).
2. Used raw materials as follows: direct materials, $41,040; and indirect materials, $10,500.
3. Recorded factory wages payable costs as follows: direct labor, $203,500; and indirect labor, $25,500.
4. Paid factory payroll cost of $229,000 with cash (ignore taxes).
5. Incurred additional factory overhead costs of $81,000 paid in cash.
6. Applied factory overhead to production at 50% of direct labor costs.

2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)

Units
Beginning inventory	5,500	units
Started	12,000	units
Ending inventory	6,000	units
Beginning inventory
Materials—Percent complete	100	%
Conversion—Percent complete	70	%
Ending inventory
Materials—Percent complete	100	%
Conversion—Percent complete	30	%

Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)

Total costs to account for: Total costs to account for: $0 $0 Unit reconciliation: Units to account for: Total units to account for Total units accounted for: Total units accounted for Equivalent units of production (EUP)- weighted average method Units % Materials EUP- Materials % Labor EUP- Conversion Total units Cost per equivalent unit of production Materials Conversion Total costs Costs Costs ÷ Equivalent units of production EUP EUP Cost per equivalent unit of production (rounded to 2 decimals) 0 0 Total costs accounted for: Cost of units transferred out: EUP Cost per EUP Total cost Direct materials Conversion Total costs transferred out Costs of ending goods in process EUP Cost per EUP Total cost Direct materials $0.00 $0 Conversion $0.00 0 Total cost of ending goods in process Total costs accounted for

• Record the transfer of goods to Finished Goods Inventory.

• Note: Enter debits before credits.

  	Transaction General journal Debit Credit g.

• Record sale of finished goods for cash.

• Note: Enter debits before credits.

  	Transaction General journal Debit Credit h.

• Record the cost of goods sold.

• Note: Enter debits before credits.

Answer 1

1.

Account Titles	Debit	Credit
Raw Material Inventory	$     120,000
Cash		$       120,000
(Purchase of inventory for cash)
Work in Process Inventory	$       41,040
Manufacturing Overhead	$       10,500
Raw Material Inventory		$         51,540
(Raw Material issued to production)
Work in Process Inventory	$     203,500
Manufacturing Overhead	$       25,500
Wages Payable		$       229,000
(Labor costs incurred)
Wages Payable	$     229,000
Cash		$       229,000
(Paid factory payroll)
Manufacturing Overhead	$       81,000
Cash		$         81,000
(paid for manufacturing overhead)
Work in Process Inventory	$     101,750
Manufacturing Overhead		$       101,750
(Manufacturing overhead applied)

Manufacturing overhead applied = $203500 x 50% = $101750

2.

Total costs to account for:
Beginning Work in process	$       10,010
Costs added	$     346,290
Total costs to account for:	$     356,300
Unit reconciliation:
Units to account for:
Beginning Work in Process	5500
Units started	12000
Total units to account for	17500
Total units accounted for:
Units transferred	11500
Ending Work in Process	6000
Total units accounted for	17500
Equivalent units of production (EUP)- weighted average method
	Units	% Materials	EUP- Materials	% Labor	EUP- Conversion
Units transferred	11500	100%	11500	100%	11500
Ending Work in Process	6000	100%	6000	30%	1800
Total units	17500		17500		13300
Cost per equivalent unit of production			Materials		Conversion
Beginning Work in Process			$         2,710		$              7,300
Cost added			$       41,040		$          305,250
Total costs		Costs	$       43,750	Costs	$          312,550
÷ Equivalent units of production		EUP	17500	EUP	13300
Cost per equivalent unit of production (rounded to 2 decimals)			$            2.50		$              23.50
Total costs accounted for:
Cost of units transferred out:	EUP	Cost per EUP	Total cost
Direct materials	11500	$              2.50	$       28,750
Conversion	11500	$            23.50	$     270,250
Total costs transferred out			$     299,000
Costs of ending goods in process	EUP	Cost per EUP	Total cost
Direct materials	6000	$              2.50	$       15,000
Conversion	1800	$            23.50	$       42,300
Total cost of ending goods in process			$       57,300
Total costs accounted for			$     356,300

Account Titles	Debit	Credit
Finished Goods Inventory	$     299,000
Work in Process Inventory		$       299,000
(Transferred to finished goods)

Data for sales and cost of goods sold not provided