Question

Entries for Process Cost System

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods	$7,750
Work in Process—Making	3,010
Work in Process—Packing	3,920
Materials	1,700

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.	Materials purchased on account		$96,520
b.	Materials requisitioned for use
		Phosphate—Making Department	$63,760
		Packaging—Packing Department	22,180
		Indirect materials—Making Department	2,490
		Indirect materials—Packing Department	890
c.	Labor used
		Direct labor—Making Department	$45,550
		Direct labor—Packing Department	30,740
		Indirect labor—Making Department	8,820
		Indirect labor—Packing Department	15,810
d.	Depreciation charged on fixed assets
		Making Department	$8,320
		Packing Department	6,870
e.	Expired prepaid factory insurance
		Making Department	$1,580
		Packing Department	630
f.	Applied factory overhead
		Making Department	$21,740
		Packing Department	24,020
g.	Production costs transferred from Making Department to Packing Department		$131,420
h.	Production costs transferred from Packing Department to Finished Goods		$206,830
i.	Cost of goods sold during the period		$207,590

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Item	Account	Debit	Credit
a.	Materials
	Accounts Payable
b.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Materials
c.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Wages Payable
d.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Accumulated Depreciation
e.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Prepaid Insurance
f.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
g.	Work in Process-Packing Department
	Work in Process-Making Department
h.	Finished Goods
	Work in Process-Packing Department
i.	Cost of Goods Sold
	Finished Goods

2. Compute the July 31 balances of the inventory accounts.

Materials	$
Work in Process—Making Department	$
Work in Process—Packing Department	$
Finished Goods	$

3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$	Credit
Factory Overhead—Packing Department	$	Debit

Answer 1

Item	Account				Debit	Credit
a.	Materials				96,520
	Accounts payable					96,520
b.	work in process-Making Deptt				63,760
	work in process-pcking Deptt				22,180
	Factory overhead -making Deptt				2,490
	Factory overhead -packing Deptt				890
	Materials					89,320
c.	work in process-Making Deptt				45,550
	work in process-pcking Deptt				30,740
	Factory overhead -making Deptt				8,820
	Factory overhead -packing Deptt				15,810
	Wages payable					100,920
d.	Factory overhead -making Deptt				8,320
	Factory overhead -packing Deptt				6,870
	Accumulated Depreciation					15,190
e	Factory overhead -making Deptt				1,580
	Factory overhead -packing Deptt				630
	prepaid insurance					2,210
f.	work in process-Making Deptt				21,740
	work in process-pcking Deptt				24,020
	Factory overhead -making Deptt					21,740
	Factory overhead -packing Deptt					24,020
g.	work in process-packing department				131,420
	work in process-making department					131,420
h.	finished goods				206,830
	work in process-packing department					206,830
i.	cost of goods sold				207,590
	finished goods					207,590
2)	materials				8,900
	work in process -Making Department				2,640
	work in process-Packing Department				5,450
	finished goods				6,990
	t-Accounts
	materials
	opening	1,700	Requistioned		89,320
	purchases	96,520
	end bal	8,900
	work in process-making deptt
	opening	3,010
	DM	63,760	trfg -packing deptt		131,420
	DL	45,550
	OH applied	21,740
	end bal	2,640
	work in process-pcking deptt
	opening	3,920
	trfd making	131,420
	DM	22,180	finished goods		206,830
	DL	30,740
	OH applied	24,020
	end bal	5,450
	finished goods
	opening	7,750	cost of goods sold		207,590
	WIP-packing	206,830
	end bal	6,990
3)	Factory overhea-making department				530	Credit
	Factory overhead -packing department				470	Debit
	Factory overhead-making department
	indirect mt	2,490	WIP		21,740
	ind lab	8,820
	dep	8,320
	prepaid	1,580
			end bal		530
	Factory overhead-packing department
	indirect mt	890	WIP		24,020
	ind lab	15,810
	dep	6,870
	prepaid	630
	end bal	470