Question

Accounts Receivable Raw Materials Beg. Bal. Beg. Bal. End. Bal. Work in Process-Refining Department Process-Blending Department Beg. Bal. و نا فه|| End. Bal. End. Bal. Finished Goods Manufacturing Overhead

Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments—Refining and Blending. Raw materials are introduced at various points in the Refining Department.

The following incomplete Work in Process account is available for the Refining Department for March:

Work in Process—Refining Department
March 1 balance	38,000	Completed and transferred to Blending	?
Materials	495,000
Direct labor	72,000
Overhead	181,000
March 31 balance	?

The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $25,000; direct labor, $4,000; and overhead, $9,000.

Costs incurred during March in the Blending Department were: materials used, $115,000; direct labor, $18,000; and overhead cost applied to production, $42,000.

Required:

1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below.

1. Raw materials used in production.
2. Direct labor costs incurred.
3. Manufacturing overhead costs incurred for the entire factory, $225,000. (Credit Accounts Payable.)
4. Manufacturing overhead was applied to production using a predetermined overhead rate.
5. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $740,000.
6. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $950,000.
7. Completed units were sold on account, $1,500,000. The Cost of Goods Sold was $900,000.

2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department’s Work in Process is given in the T-account shown above.)

Raw materials	$	618,000
Work in process—Blending Department	$	65,000
Finished goods	$	20,000

Answer 1

I credit Transactions General Journal Work in Process - Refining Department Work in process - Blending Department Raw materials (To record issuance of raw materials) Debit $495,000 $ 115,000 $ 610,000 Work in Process - Refining Department $72,000 Work in Process - Blending Department $18,000 Salaries and wages payable (To record direct labor cost incurred) $90,000 $225,000 c. $225,000 Manufacturing overhead Accounts Payable (To record manufacturing expenses) $ 181,000 d(1) work in Process - Refining Department $ 181,000 manufacturing Overhead (To record oves head cost applied) d(2) $ 42,000 Iwork in Process-Brending Department $ 42,000 Manufacturing Overhead To recond overhead cost applied) L

$740,ooo Work in Process - Blending Department & 740,000 Work in Process - Refining Department (To second transfer of semifinished unit) finished Goods $950,000 Work in Process - Blending Department To second transfer of completed units) $950,000 (1) $1,500,000 Accounts Receivable Sales (To recond sales on $1,500,000 account) $900,000 glas $ 900,000 Cost of Goods sold finished Goods (To record cost of goods solds رفی materials Accounts Receivable 195 $1,500,000 Raw Beg. Bel $618,000 as $610,000 Endi bat $8,000

Work in Process Blending Department Work in Provers Refining Department Beg Bal & 38,000 Las $495,000 $740,000 (6 $72,000 a $ 181,000 Beg. Bal & 65,000 Has $ 115,000 its $950,000 6 $ 18,000 (d, $ 42,000 e $740,000 Endi bal $46,000 End. Bat. ($30,000 finished Goods Beg Bali & 20,000 tips $950,000 $3$900,000 Manufacturing Overhead $223,000 19 $225,000 ldly Endi Bali $2,000 Endi bat $70,000 Шошо. Речу вые 9 $225,000 salaries and wages Payable by $ 90,000 sold Sales I Cost of Goods figs $900,000 193 $1,500,000 calculation manufacturing overhead Manufacturing overhead Refining Department & manufacturing overhead Blending Department - $ 181,000 + $ 42,000 - $223,000