Question

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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 Work in Process-Refining Department 32,000 Completed and transferred to Blending 147,600 80,200 485,000 Materials Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,000; direct labor, $3,900; and overhead, $21,100. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,900; and overhead cost applied to production, $108,000.

Answer 1

Solution 1:
Journal Entries - Lubricants Inc.
Event	Particulars	Debit	Credit
a	Work In Process - Refining department Dr	$147,600.00
	Work In Process - Blending department Dr	$45,000.00
	To Raw material inventory		$192,600.00
	(To record material used in production)
b	Work In Process - Refining department Dr	$80,200.00
	Work In Process - Blending department Dr	$17,900.00
	To Wages Payable		$98,100.00
	(To record direct labor cost incurred)
c	Manufacturing overhead Dr	$626,000.00
	To Accounts Payable		$626,000.00
	(To record manufacturing overhead incurred)
d	Work In Process - Refining department Dr	$485,000.00
	Work In Process - Blending department Dr	$108,000.00
	To Manufacturing overhead		$593,000.00
	(To apply manufacturing overhead)
e	Work In Process - Blending department Dr	$672,000.00
	To Work In Process - Refining department		$672,000.00
	(Being units completed in refining transferred to Blending)
f	Finished goods inventory Dr	$710,000.00
	To Work In Process - Blending department		$710,000.00
	(Being units completed in blending transferred to finished goods)
g1	Accounts receivables Dr	$1,420,000.00
	To Sales Revenue		$1,420,000.00
	(To record sales on account)
g2	Cost of goods sold Dr	$660,000.00
	To Finished goods inventory		$660,000.00
	(To record cost of goods sold)

Solution 2:
Raw materials inventory
Particulars	Debit	Particulars	Credit
March 1 balance	$205,600.00	Material used	$192,600.00
March 31, balance	$13,000.00
Work In Process - Refining
Particulars	Debit	Particulars	Credit
March 1 balance	$32,000.00	Completed and transferred to Blending	$672,000.00
Material	$147,600.00
Direct labor	$80,200.00
Overhead	$485,000.00
March 31, balance	$72,800.00
Work In Process - Blending
Particulars	Debit	Particulars	Credit
March 1 balance	$58,000.00	Completed and transferred to Finished Goods	$710,000.00
Transferred from Refining	$672,000.00
Material	$45,000.00
Direct labor	$17,900.00
Overhead	$108,000.00
March 31, balance	$190,900.00
Finished Goods Inventory
Particulars	Debit	Particulars	Credit
March 1 balance	$23,000.00	Cost of goods sold	$660,000.00
Transferred from Blending	$710,000.00
March 31, balance	$73,000.00
Manufacturing overhead
Particulars	Debit	Particulars	Credit
Overhead incurred	$626,000.00	Overhead applied	$593,000.00
March 31, balance	$33,000.00
Cost of goods sold
Particulars	Debit	Particulars	Credit
Finished goods inventory	$660,000.00
March 31, balance	$660,000.00
Sales Revenue
Particulars	Debit	Particulars	Credit
		Accounts receivables	$1,420,000.00
		March 31, balance	$1,420,000.00