Question

pendix D & Chapters 1-3 Saved Help Re-Tire produces bagged mulch made from recycled tires. Production involves shredding tires and packaging the pieces for sale in the bagging department. All direct materials enter in the first process. The following describes production operations for October Direct materials used Direct labor used 25+ in Shredding; 754 in Bagging. Predetermined overhead rate based on direct labor) Transferred to Bagging Transferred to finished goods $238,000 $145,000 1650 $201.000 $599,000 2013 The company's revenue for the month totaled $440,000 from credit sales, and its cost of goods sold for the month is $250,000. Prepare summary journal entries dated October 31 to record its October production activities for (1) direct materials usage. (2) direct labor incurred (3) overhead applied. (4) goods transfer from Shredding to Bagging, (5) goods transfer from Bagging to finished goods, (6) credit sales, and (7) cost of goods sold.

Answer 1

Credit Debit $ 238,000 No. Account titles and explanation 1 Work in Process-Shredding Raw Material Inventory (To record direct material used) $ 238,000 $ 36,250 $ 108,750 Workings: Work in Process-Shredding Work in Process-Bagging $145,000*25%) ($145,000*75%] 36250 1087501 2 Work in Process-Shredding Work in Process-Bagging Factory Wages Payable (To record direct wages used) $ 145,000 $ 59,812 $ 179,438 Work in Process-Shredding Work in Process-Bagging ($145,000*25%*165%] ($145,000*75%*165%] 3 Work in Process-Shredding Work in Process-Bagging Factory Overhead (To record purchase of supplies on account) 59813 179438 $ 239,250 $ 201,000 4 Work in Process-Bagging Work in Process-Shredding (To record transfer from shredding to bagging) $ 201,000 $ 597,000 5 Finished Goods Inventory Work in Process-Bagging (To record transfer to bagging to finished goods) $ 597,000 $ 440,000 6 Accounts Receivable Sales (To record sales on account) $ 440,000 $ 250,000 7 Cost of goods sold Finished Goods Inventory (To record service rendered for cash) $ 250,000

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