Question

Blue Water Sails, Inc. (BWS) manufactures sailcloth used by sailmakers that produce sails for sailboats. BWS’s sailcloth is the conventional polyester-based sail material and is used widely in recreational boating. Sailmakers throughout the world use BWS’s sailcloth. The manufacture of sailcloth has a small number of processes, and BWS integrates them carefully so that there is very little Work-in-Process Inventory. The product is measured in yards of cloth, which is prepared in rolls 42 inches wide. Because it has little Work-in-Process Inventory, BWS also uses backflush accounting to simplify the accounting for its operations. BWS has the following information for the most recent accounting period. The beginning inventory of polyester fiber was $137,700, and the ending inventory was $168,400.

Polyester fiber purchased	$	674,500
Conversion cost incurred	$	1,595,000
Direct materials standard cost	$	4.10	per yard of cloth
Conversion standard cost	$	8.25	per yard of cloth
Units produced		153,500	yards of cloth

Show the entries for manufacturing costs incurred or applied, completion of 153,500 yards of product, and the closing entries

1. To record direct materials purchase

2. Record conversion costs incurred

3. Record finished goods for the standard cost of the 153,500 yards produced.

4. Record the closing of the two conversion costs accounts.

5. Record the closing of the actual usage of inventory.

Answer 1

Show the entries for manufacturing costs incurred or applied, completion of 153,500 yards of product, and the closing entries

1. To record direct materials purchase

2. Record conversion costs incurred

3. Record finished goods for the standard cost of the 153,500 yards produced.

4. Record the closing of the two conversion costs accounts.

5. Record the closing of the actual usage of inventory.

Refer to the below images for more detailed solution with calculations.

ment: Journal entries : Reasurement particolars -Debit credit 1 Materials purchased: 9674500 Materials To inventory accounts ale or payable $674500 $ 1595000 conversion cost incorred: Conversion cost incorred Ale or To wages payable other accounts $ 159 5ooo 0 Finished Cost of goods are shown for the standard the 153500 Yards produced: Finished goods Atc or to Materials inventory To conversion cost applied $ 1895725 a $629350 $1266375 workings : a 153500 (54000 + $8.25) 3 153500 x $ 4.00 8 153500 x $ 8.25 - $ 1895725 = $ 629350 = 1266375 (4) close the two conversion cost accounts to cous: Conversion cost applied Ale or $ 1266375 cost of goods sold All Dr $ 328625 To conversion cost incorred Alle FIS 95000

③ inventory Debit credit close the actual usage of to cost of goods sold: $14450 cost of TO goods sold Alcor Materials inventory All $ 14450 Working : 9 168400) Actual usage ($137700 + $ 67 4500 = $ 643800 Less: - Standard (& 153500 x14.10) - $629350 & 14450 Difference