Question

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods	$26,570
Work in Process—Making	10,320
Work in Process—Packing	13,460
Materials	5,830

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.	Materials purchased on account		$330,910
b.	Materials requisitioned for use
		Phosphate—Making Department	$218,590
		Packaging—Packing Department	76,030
		Indirect materials—Making Department	8,550
		Indirect materials—Packing Department	3,070
c.	Labor used
		Direct labor—Making Department	$156,170
		Direct labor—Packing Department	105,410
		Indirect labor—Making Department	30,240
		Indirect labor—Packing Department	54,220
d.	Depreciation charged on fixed assets
		Making Department	$28,510
		Packing Department	23,540
e.	Expired prepaid factory insurance
		Making Department	$5,400
		Packing Department	2,160
f.	Applied factory overhead
		Making Department	$74,520
		Packing Department	82,340
g.	Production costs transferred from Making Department to Packing Department		$450,580
h.	Production costs transferred from Packing Department to Finished Goods		$709,130
i.	Cost of goods sold during the period		$711,720

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Item	Account	Debit	Credit
a.	Materials
	Accounts Payable
b.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Materials
c.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Wages Payable
d.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Accumulated Depreciation
e.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Prepaid Insurance
f.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
g.	Work in Process-Packing Department
	Work in Process-Making Department
h.	Finished Goods
	Work in Process-Packing Department
i.	Cost of Goods Sold
	Finished Goods

2. Compute the July 31 balances of the inventory accounts.

Materials	$
Work in Process—Making Department	$
Work in Process—Packing Department	$
Finished Goods	$

3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$	Credit
Factory Overhead—Packing Department	$	Debit

Answer 1

Journal Entries
Item	Accounts	Debit	Credit
a)	Materials	$330,910
	Accounts Payable		$330,910
	(To record the purchase of materials on account)
b)	Work in Process - Making Department	$218,590
	Work in Process - Packing Department	$76,030
	Factory Overhead - Making Department	$8,550
	Factory Overhead - Packing Department	$3,070
	Materials		$306,240
	(To record the requisition of materials for use)
c)	Work in Process - Making Department	$156,170
	Work in Process - Packing Department	$105,410
	Factory Overhead - Making Department	$30,240
	Factory Overhead - Packing Department	$54,220
	Wages Payable		$346,040
	(To record the labor used)
d)	Factory Overhead - Making Department	$28,510
	Factory Overhead - Packing Department	$23,540
	Accumulated Depreciation		$52,050
	(To record the depreciation on the fixed assets)
e)	Factory Overhead - Making Department	$5,400
	Factory Overhead - Packing Department	$2,160
	Prepaid Insurance		$7,560
	(To record the expiration of prepaid factory insurance)
f)	Work in Process - Making Department	$74,520
	Work in Process - Packing Department	$82,340
	Factory Overhead - Making Department		$74,520
	Factory Overhead - Packing Department		$82,340
	(To record the application of factory overheads)
g)	Work in Process - Packing Department	$450,580
	Work in Process - Making Department		$450,580
	(To record the transfer of costs from Making Department to Packing Department)
h)	Finished Goods	$709,130
	Work in Process - Packing Department		$709,130
	(To record the transfer of costs from Packing Department to Finished Goods)
i)	Cost of Goods Sold	$711,720
	Finished Goods		$711,720
	(To record the cost of goods sold)
	2) Balances on July 31:
	Materials ($5,830 + $330,910 - $306,240)	$30,500
	Work in Process - Making Department ($10,320 + $218,590 + $156,170 + $74,520 - $450,580)	$9,020
	Work in Process - Packing Department ($13,460 + $76,030 + $105,410 + $82,340 + $450,580 - $709,130)	$18,690
	Finished Goods ($5,830 + $709,130 - $711,720)	$3,240
	3) Balances of Factory Overheads on July 31:
	Factory Overhead - Making Department ($8,550 + $30,240 + $28,510 + $5,400 - $74,520)	($1,820)	Credit
	Factory Overhead - Packing Department ($3,070 + $54,220 + $23,540 + $2,160 - $82,340)	$650	Debit