Question

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: March 1 balance Materials Direct labor Overhead March 31 balance Work in Process-Refining Department 32,600 Completed and transferred to Blending 144.600 80,200 482,000 The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7.500; direct labor $3,800, and overhead, $21,300 Costs incurred during March in the Blending Department were materials used $45.000 direct labor, $17.900; and overhead cost applied to production, S103,000. 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 (a) below. a. Raw materials used in production b. Direct labor costs incurred c. Manufacturing overhead costs incurred for the entire factory, 5676,000. (Credit Accounts Payable) d. Manufacturing overhead was applied to production using a predetermined overhead rate, e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, S642.000 f Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods $730.000 g. Completed units were sold on account, $1,380,000. The Cost of Goods Sold was $600.000

Answer 1

1	Transction	General journal					Debit	Credit
	a.	Work in process-Refining department					144600
		Work in process-Blending department					45000
		Raw Materials						189600
		(Direct materials used)
	b.	Work in process-Refining department					80200
		Work in process-Blending department					17900
		Salaries and wages payable						98100
		(Direct labor recorded)
	c.	Manufacturing overhead					676000
		Accounts payable						676000
		(Manufacturing overhead incurred)
	d.	Work in process-Refining department					482000
		Work in process-Blending department					103000
		Manufacturing overhead						585000
		(Factory overhead applied)
	e.	Work in process-Blending department					642000
		Work in process-Refining department						642000
		(Production cost transferred to blending department)
	f.	Finished goods					730000
		Work in process-Blending department						730000
		(Production cost transferred to finished goods)
	g(1).	Accounts receivable					1380000
		Sales						1380000
		(Units sold on account)
	g(2).	Cost of goods sold					600000
		Finished goods						600000
		(Cost of goods sold recorded)
2		Accounts receivable					Raw materials
	Beg. Bal.	0				Beg. Bal.	208600	189600	a.
	g(1).	1380000					208600	189600
		1380000	0			End. Bal.	19000
	End. Bal.	1380000
	Work in process-Refining department					Work in process-Blending department
	Beg. Bal.	32600	642000	e.		Beg. Bal.	56000	730000	f.
	a.	144600				a.	45000
	b.	80200				b.	17900
	d.	482000				d.	103000
		739400	642000			e.	642000
	End. Bal.	97400					863900	730000
						End. Bal.	133900

585000 d. Beg. Bal. f. Finished goods 15000 600000 g(2). 730000 745000 600000 145000 Manufacturing overhead c. 676000 676000 End. Bal. 91000 585000 End. Bal. Accounts payable 676000 c. 0 676000 676000 End. Bal. Salaries and wages payable 98100 b. 98100 98100 End. Bal. Sales 8(2). Cost of goods sold 600000 600000 1380000 g(1). 1380000 1380000 End. Bal. 0 01 End. Bal. 600000