Question

Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 [The following information applies to the questions displayed below.] Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the Cutting process. The following information is available regarding its May inventories: Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory Beginning Ending Inventory Inventory 43,500 51,500 63,300 60,500 20, 100 8,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching $ 25,000 21,750 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 15,600 62,400 133,000 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs $ 6,000 55,000 47,000 Factory Overhead Rates Cutting (150% of direct materials used) Stitching (120% of direct labor used) Sales $256,000
Required information Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 [The following information applies to the questions displayed below.] Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the Cutting process. The following information is available regarding its May inventories: Beginning Inventory Ending Inventory Work in process inventory—Cutting 43,500 51,500 Work in process inventory—Stitching 63,300 60,500 Finished goods inventory 20,100 8,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit $ 25,000 Direct materials used—Cutting 21,750 Direct materials used—Stitching 0 Direct labor Direct labor—Cutting $ 15,600 Direct labor—Stitching 62,400 Total factory payroll paid (in cash) 133,000 Factory Overhead (Actual costs) Indirect materials used $ 6,000 Indirect labor used 55,000 Other overhead costs 47,000 Factory Overhead Rates Cutting (150% of direct materials used ) Stitching (120% of direct labor used ) Sales $256,000 rev: 01_28_2020_QC_CS-197408 Problem 20-1A Part 2 2. Prepare summary journal entries dated May 31 to record the following production activities during May: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) direct labor costs incurred, (e) indirect labor costs incurred, (f) payment of factory payroll, (g) other overhead costs, (credit Other Accounts), (h) overhead applied, (i) goods transferred from Cutting to Stitching, (j) goods transferred from Stitching to finished goods, (k) cost of goods sold, and (l) sales.

Answer 1

a]	Raw materials inventory	$           25,000
	Accounts payable		$         25,000
b]	WIP inventory-Cutting	$           21,750
	Raw materials inventory		$         21,750
c]	Factory overhead	$             6,000
	Raw materials inventory		$           6,000
d]	WIP inventory-Cutting	$           15,600
	WIP inventory-Stitching	$           62,400
	Wages and salaries payable		$         78,000
e]	Factory overhead	$           55,000
	Wages and salaries payable		$         55,000
f]	Wages and salaries payable	$       1,33,000
	Cash		$     1,33,000
g]	Factory overhead	$           47,000
	Accruals/Other payables		$         47,000
h]	WIP inventory-Cutting [21750*150%]	$           14,500
	WIP inventory-Stitching [62400*120%]	$           74,880
	Factory overhead		$         89,380
i]	WIP inventory-Stitching [43500+21750+15600+14500-51500]	$           43,850
	WIP inventory-Cutting		$         43,850
j]	Finished goods inventory [63300+62400+74880+43850-60500)	$       1,83,930
	WIP inventory-Stitching		$     1,83,930
j]	Cost of goods sold (20100+183930-8250)	$       1,95,780
	Finished goods inventory		$     1,95,780
k]	Accounts receivable	$       2,56,000
	Sales		$     2,56,000