Question

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Sierra Company manufactures woven blankets and accounts for product costs using process costing. Data below are for one of its processing departments. The following information is available regarding its May inventories. Raw materials inventory Work in process inventory Finished goods inventory Beginning Inventory $ 60,000 435,000 633,000 Ending Inventory $ 92,500 515,000 605,000 The following additional information describes the company's production activities for May. $ 250,000 1,530,000 87,000 $ Raw materials purchases (on credit) Factory payroll cost (paid in cash) Other overhead cost (Other Accounts credited) Materials used Direct Indirect Labor used Direct Indirect Overhead rate as a percent of direct labor Sales (on credit) 157,500 60,000 $ 780,000 750,000 115% $2,500,000 The predetermined overhead rate was computed at the beginning of the year as 115% of direct labor cost.

Answer 1

Raw materials (RM)					Work in process (WIP)
					Beg bal	435,000	Trsfd	1,754,500
Beg bal	60,000	Direct M	157,500		DM used	157,500
purchases	250,000	indirect mat	60,000		DL used	780,000
					OH applied	897000
ending bal	92,500
					end bal	515,000
Factory wages payable					finished goods (FG)
cash	1,530,000	dL used	780,000		beg bal	633,000	COGS	1,782,500
		indirect la	750,000		Tsfd	1,754,500
end bal	0				end bal	605,000
Factory overhead					income statement (partial)
other	87,000	oh applied	897,000		Sales			2,500,000
indirct mat	60,000				cost of goods sold			1,782,500
indirect la	750,000				Gross margin			717,500
end bal	0	0
					Cost of goods transferred			1,754,500
					Cost of goods sold			1,782,500
	Journal Entries
	Date	General Journal				Debit	Credit
	1)	Raw materials inventory				250,000
		Accounts payable					250,000
	2)	Work in process inventory				157,500
		Raw materials inventory					157,500
	3)	Facotry overhead				60,000
		Raw materials inventory					60,000
	4)	Work in process inventory				780,000
		Factory wages payable					780,000
	5)	Facotry overhead				750,000
		Factory wages payable					750,000
	6)	Factory wages payable				1,530,000
		cash					1,530,000
	7)	Factory overhead				87,000
		other accounts					87,000
	8)	Work in process inventory				897000
		factory overhead					897000
	9)	Finished goods inventory				1,754,500
		Work in process inventory					1,754,500
	10)	Accounts receivable				2,500,000
		sales					2,500,000
	11)	Cost of goods sold				1,782,500
		finished goods invnetory					1,782,500