Question

Two Departments, Journal Entries with Supporting Calculations-Weighted Average Method Patterson Laboratories, Ic., produces one of its products in two successive departments. All materials are added at the beginning of the process in Department 1; no materials are used in Department 2. Conversion costs are incurred evenly in both departments. Patterson uses the weighted average method for process costing. January 1, 2019, inventory account balances are as follows: Materials inventory Work in process-Department 1 (3,000 units, 30% complete) Direct material Conversion costs Work in process-Department 2 (3,550 units, 40% complete) 43,439 Finished goods inventory (2,000 units @ $16) $30,000 4,560 10,640 32,000 During January, the following transactions occurred: 1. Purchased material on account, $90,000. 2. Placed $84,000 of material into process in Department 1. This $84,000 represents 24,000 units of materials. 3. Distributed total payroll costs: $108,116 of direct labor to Department 1, $62,700 of direct labor to Department 2, and $51,000 of indirect labor to Manufacturing Overhead. 4. Incurred other actual manufacturing overhead costs, $81,000. (Credit Other Accounts.) 5. Applied overhead to the two processing departments: $88,000 to Department 1 and $43,900 to Department 2. 6. Transferred 25,000 completed units from Department 1 to Department 2. The 2,000 units remaining in Department 1 were 20% completed with respect to conversion costs. 7. Transferred 26,000 completed units from Department 2 to finished goods inventory. The 2,550 units remaining in Department 2 were 70% completed with respect to conversion costs. 8. Sold 20,000 units on account at $27 per unit. Patterson uses weighted average inventory costing procedures for the finished goods inventory. a. Record the January transactions in general journal form for Department 1 and Department 2. Hint: Complete the product cost reports for Departments 1 and 2 before entering journal entries for transactions 6, 7, and 8. General Journal Description Materials inventory Accounts Payable Work in process-Depar :v Materials inventory : 3. Work in process-Department 1 Work in process-Department 2 Manufacturing overhea v Wages payable Manufacturing overhea v Other accounts 5. Work in process-Department 1 Work in process-Depar : v Manufacturing overhe = 6. Work in process-Depar : v Work in process-Depa v Finished goods invento = Work in process-Depa :v Accounts receivable Ref. Debit Credit 90,000 v 1. 90,000 2. 84,000 84,000 108,116 v 62,700 v 51,000 221,816 v 81,000 v 81,000 v 88,000 43,900 v 131,900 v 0x 0x 7. 540,000 8. 540,000v Sales To record sales. Cost of goods sold Finished goods invent To record cost of goods sold. 0x 0x

Answer 1

Prepare joumal entries as follows: Credit Ref 1 Description Material Inventory Accounts payable Debit $90,000 $90,000 $84.000 WIP Department 1 Material inventory $84,000 WIP Department 1 WIP Department 2 Manufacturing overhead Wages payable $108,116 $62,700 $51,000 $221,816 4 $81,000 Manufacturing overhead Other accounts $81,000 WIP Department 1 WIP Department 2 Manufacturing overhead $88.000 $43.900 $131.900 $285.500 WIP Department 2 WIP Department 1 $285,500

7 $400,400 Finished Goods WIP Department 2 $400.400 8 Accounts Receivable $540,000 $540,000 $308,857 COGS Finished goods inventory (S432,400 x 20000/28000) $308,857

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b)

Patterson Laboratories, Inc. Department 1
Flow of Units and Equivalent calculations, January 2019
		Equivalent Units
		% work done	Direct Materials	% work done	Conversion Costs
Completed/Transferred	25000	100%	25000	100%	25000
Ending inventory	2000	100%	2000	20%	400
Total	27000		27000		25400

Product Cost Report
		Direct Materials	Conversion costs
Beginning inventory	15200	4560	10640
Cuurrent	280116	84000	196116
Total cost to account for	295316	88560	206756
÷ Total Equivalent units		27000	25400
Average cost/Equivalent unit		$3.28	$8.14
Complete/Tranferred:
Direct materials (25000 × $3.28)	$82,000
Conversion costs (25000 × $8.14)	$203,500
Cost of goods manufactured	$285,500
Ending Inventory:
Direct materials (2000 × $3.28)	$6,560
Conversion costs (400 × $8.14)	$3,256
Cost of ending inventory	$9,816
Total cost allocated	$295,316

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c)

Patterson Laboratories, Inc. Department 2
Flow of Units and Equivalent calculations, January 2019
		Equivalent Units
		% work done	Direct Materials	% work done	Conversion Costs
Completed/Transferred	26000	100%	26000	100%	26000
Ending inventory	2550	100%	2550	70%	1785
Total	28550		28550		27785

Product Cost Report
		Direct Materials	Conversion costs
Beginning inventory	43439	0	43439
Cuurrent	392100	285500	106600
Total cost to account for	435539	285500	150039
÷ Total Equivalent units		28550	27785
Average cost/Equivalent unit		$10.00	$5.40
Complete/Tranferred:
Direct materials (26000 × $10)	$260,000
Conversion costs (26000 × $5.40)	$140,400
Cost of goods manufactured	$400,400
Ending Inventory:
Direct materials (2550 × $10)	$25,500
Conversion costs (1785 × $5.40)	$9,639
Cost of ending inventory	$35,139
Total cost allocated	$435,539

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d)

Material Inventory
Bal.	$30,000	Jan. 02	$84,000
Jan. 01	$90,000
End. Bal.	$36,000
WIP - Dept. 1
Bal.	$15,200	Jan. 06	$285,500
Jan. 02	$84,000
Jan. 03	$108,116
Jan. 05	$88,000
End. Bal.	$9,816
WIP - Dept. 2
Bal.	$43,439	Jan. 07	$400,400
Jan. 03	$62,700
Jan. 05	$43,900
Jan. 06	$285,500
End. Bal.	$35,139
Finished Goods Inventory
Bal.	$32,000	Jan. 08	$308,857
Jan. 07	$400,400
End. Bal.	$123,543