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: Work in Process-Refining Department March 3 1.600 Completed and balance transferred to Blending Materials 1 4 4.600 Direct labor 67,200 Overhead 476,000 March 31 balance ? ? The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,700; direct labor, $3,400; and overhead, $20,500. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,300; and overhead cost applied to production, $104,000.

Answer 1

Solution 1:
Journal Entries - Lubricants Inc.
Event	Particulars	Debit	Credit
a	Work In Process - Refining department Dr	$144,600.00
	Work In Process - Blending department Dr	$45,000.00
	To Raw material inventory		$189,600.00
	(To record material used in production)
b	Work In Process - Refining department Dr	$67,200.00
	Work In Process - Blending department Dr	$17,300.00
	To Wages Payable		$84,500.00
	(To record direct labor cost incurred)
c	Manufacturing overhead Dr	$716,000.00
	To Accounts Payable		$716,000.00
	(To record manufacturing overhead incurred)
d	Work In Process - Refining department Dr	$476,000.00
	Work In Process - Blending department Dr	$104,000.00
	To Manufacturing overhead		$580,000.00
	(To apply manufacturing overhead)
e	Work In Process - Blending department Dr	$682,000.00
	To Work In Process - Refining department		$682,000.00
	(Being units completed in refining transferred to Blending)
f	Finished goods inventory Dr	$790,000.00
	To Work In Process - Blending department		$790,000.00
	(Being units completed in blending transferred to finished goods)
g1	Accounts receivables Dr	$1,450,000.00
	To Sales Revenue		$1,450,000.00
	(To record sales on account)
g2	Cost of goods sold Dr	$640,000.00
	To Finished goods inventory		$640,000.00
	(To record cost of goods sold)

Solution 2:
Raw materials inventory
Particulars	Debit	Particulars	Credit
March 1 balance	$205,600.00	Material used	$189,600.00
March 31, balance	$16,000.00
Work In Process - Refining
Particulars	Debit	Particulars	Credit
March 1 balance	$31,600.00	Completed and transferred to Blending	$682,000.00
Material	$144,600.00
Direct labor	$67,200.00
Overhead	$476,000.00
March 31, balance	$37,400.00
Work In Process - Blending
Particulars	Debit	Particulars	Credit
March 1 balance	$45,000.00	Completed and transferred to Finished Goods	$790,000.00
Transferred from Refining	$682,000.00
Material	$45,000.00
Direct labor	$17,300.00
Overhead	$104,000.00
March 31, balance	$103,300.00
Finished Goods Inventory
Particulars	Debit	Particulars	Credit
March 1 balance	$13,000.00	Cost of goods sold	$640,000.00
Transferred from Blending	$790,000.00
March 31, balance	$163,000.00
Manufacturing overhead
Particulars	Debit	Particulars	Credit
Overhead incurred	$716,000.00	Overhead applied	$580,000.00
March 31, balance	$136,000.00
Cost of goods sold
Particulars	Debit	Particulars	Credit
Finished goods inventory	$640,000.00
March 31, balance	$640,000.00
Sales Revenue
Particulars	Debit	Particulars	Credit
		Accounts receivables	$1,450,000.00
		March 31, balance	$1,450,000.00