Question

COMPREHENSIVE PROBLEM Major League Bat Company Weighted average: Review of Chapters 1 and 3 CP 3 Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process. Required You are to maintain records and produce measures of inventories to reflect the July events of this company. Set up the following general ledger accounts and enter the June 30 balances: Raw Materials Inventory, $25,000; Work in Process Inventory, $8,135 ($2,660 of direct materials and $5,475 of conversion); Finished Goods Inventory, $110,000; Sales, $o; Cost of Goods Sold, $o; Factory Wages Payable, $o; and Factory Overhead, $o. 1. Prepare journal entries to record the following July transactions and events. a. Purchased raw materials for $125,000 cash (the company uses a perpetual inventory system) b. Used raw materials as follows: direct materials, $52,440; and indirect materials, $10,000. e. Recorded factory wages payable costs as follows: direct labor, $202,250; and indirect labor, $25,000. d. Paid factory payroll cost of $227,250 with cash (ignore taxes). e. Incurred additional factory overhead costs of $80,000 paid in cash. f. Applied factory overhead to production at 50% of direct labor costs Check (1) Cr. Factory Overhead, $101125

Answer 1

Refer to the below images for the above mentioned questions, in a detailed way of solution with calculations.

unt : Journal entries (Joly): Requirement 0. particulars credit Debit $ 125000 a. $ 125000 Raw Material inventory ate or To cash all (Being to purchased raw materials for cast) 52440 $ 10000 $62440 Goods in process inventory Mc Dr factory overkeod ate Dr TO Raw Materials inventory (Being to record are of raw materials) or $227.250 $227250 Factory TO (Being payroll ale Cash Ale paid factory payroll with cash) $202250 & 25000 Goods in process inventory Alcor factory overhead Alc o r to Factory payroll (Bring to record direct & Indirect £227250 labor) ale or 4 80 000 Factory To (Being overhead Cast Ale paid other $ 80000 overhead with cast) & lonar $ 101125 Goods in To (Being process inventory ale or factory overhead Alc Allocated overread at set of direct labor)

m @ : Major League Bat Company process cost Summary For Month ended July 31 Deaunement particulars Amount Amount costs charged to production: Costs of beginning goods in process: Direct Materials Direct lobor Factory Overhead $2660 13650 $ 1825 + 8135 Costs incorred this period: Direct Materials Direct labor $ 52440 $262250 $ 101125 Factory overhead $355815 6363950 Toral Costs to account for unit cost information: Units to account for 11000 Beginning goods in process units started this period Soral Units to account for Sooo 14000 19000 whits accounted for complete & transferred out Ending goods in process Toral onits accounted For T9ooo Equivalent units of Net production Dirat Material 1 1000 EUR Labor 11000 EUR Factory overhead 11.000 Eup hits completed & transferred out units of ending goods in praess - Direct materials (2000 & 100t.) - Divat labor (4000 & 401) - Factory overhead (8000 & Hol.). ооо Ее 3200 EUR 3200 Eup Equivalent units of of production Production & 19000 Eup 14200 Eup 14200

cost per Equivalent units of production - particulars Direct Material Divat Labor Factory overhead $ 7650 $2660 52440 $ 1825 101125 202290 $55100 $ 205900 cost of beginning goods in process costs incurred this period Total costs (a) Eup (6) cost per Eup (a; b) → $ 102950 19000 Eup $2.90 ч або E $14.50 142oo Evg $7.25 Allocation of cost : particolars Amoont Amount $31900 Costs transferred out : Direct Materials 000 fupr 2.90) Direct labor (4000 Eupx & 14.50) factory overhead (11000 Eup $725) $ 159500 $79750 $271150 $23200 sts of ending goods in process: Direct Materials (2000 Eupx & 2:90) Direct labor (7200 kop & 114.50) factory overhead (3200 Eup x 7.25 Goral costs accounted for a $46400 & 23200 992800 $363950

Journal entries: Reajuivemen particulars credit Debit 4271150 g. Finished goods To Goods in (Being transferred Inventory ale or process inventory to finished goods) $271150 $625000 cash To (Being Alo sales sold Dr All finished 1625000 goods for cash) $265700 $265700 cost of goods sold ate or To finished goods inventory ( Being transferred cost from goods to cost of goods Sold) firished C General ledger accounts: Reatirement Raw Materials Inventory Account No: 132 Date Debit I Credit Balance R1000 fone 30 particolors Balance Purchares usage 125000 (b) 15oooo 87560 62440 Account No: 137 Data june 3o Goods in process Ioventory particolare Debit credit Balance Direct materials Direct labor 202250 overhead application 101125 transfer to finished 27150 52440 (d) (+) Balance 8135 60575 262825 363950 93800 goods

Account No: 135 Date June 30 Finished Goods Inventory particulars Debit credit Balance Transfer in from production 2711501 July soles 265700 Balance 10000 391150 115450 Sales, Account No: 413 Date Debit perkeulars Sales July credit 625000 Batance 3000 Cost of goods sold Account No: 502 eredit Balance particulars sales Debit 265700 Joly 265700 Factory payroll Account No: 530 Date particulars sebit credit Balance 227250 227250 July costs Allocation (d) 227250 overhead Account No: 540 Debit credit Balance factory particolars Indirat Materials Indirect labor other overhead costs overheed application 10000 2S000 R000 10000 31000 11 foto 13875 101125

e calculation of gross profit (Joly) : Requirement particulars Sales cost of goods Gold * Amount & 625000 (279545 $345 425 Gross profit $279 575 = 1 265700 + & 13 875 (onderapplied overhead)