Question

Required:
You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $39,000; Work in Process Inventory, $11,585 ($3,660 of direct materials and $7,925 of conversion); Finished Goods Inventory, $200,000; Sales, $0; Cost of Goods Sold, $0; Factory Wages Payable, $0; and Factory Overhead, $0.

1. Prepare journal entries to record the following July transactions and events.

1. Purchased raw materials for $215,000 cash (the company uses a perpetual inventory system).
2. Used raw materials as follows: direct materials, $70,090; and indirect materials, $20,000.
3. Recorded factory wages payable costs as follows: direct labor, $227,250; and indirect labor, $35,000.
4. Paid factory payroll cost of $262,250 with cash (ignore taxes).
5. Incurred additional factory overhead costs of $100,000 paid in cash.
6. Applied factory overhead to production at 50% of direct labor costs.

2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted-average method is used. (Round "Cost per EUP" to 2 decimal places.)

Units
Beginning inventory	12,500	units
Started	17,000	units
Ending inventory	11,000	units
Beginning inventory
Materials—Percent complete	100	%
Conversion—Percent complete	70	%
Ending inventory
Materials—Percent complete	100	%
Conversion—Percent complete	30	%

3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following:

7. Total costs transferred to finished goods for July.
8. Sale of finished goods costing $315,700 for $725,000 in cash.

4. Post entries from parts 1 and 3 to the following general ledger accounts.
5. Compute the amount of gross profit from the sales in July. (Hint: Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold.)

Answer 1

First 6 subparts of journal entries are being answered, please ask the remaning question subparts seperately.

Transaction General Journal Debit Credit a. 215,000 Raw materials inventory Cash 215,000 b. 70,090 Work in process inventory Factory overhead Raw materials inventory 20,000 90,090 C. Work in process inventory Factory overhead Factory wages payable 227,250 35,000 262,250 d. 262,250 Factory wages payable Cash 262,250 e. 100,000 Factory overhead Cash 100,000 f. 113,625 Work in process inventory Factory overhead 113,625