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 33,000 Completed and transferred to Blending 144,600 68,200 475,000 ? The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,700; direct labor, $4,200; and overhead, $20,100. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,300; and overhead cost applied to production, $118,000.

Answer 1

1)

Transaction	Account titles and explanation	Debit	Credit
a.	Work in process- Refining	$144600
	Work in process- Blending	$45000
	Raw materials		$189600
	(To record raw materials used in production)
b.	Work in process- Refining	$68200
	Work in process- Blending	$17300
	Salaries and wages payable		$85500
	(To record direct labor cost incurred)
c.	Manufacturing overhead	$656000
	Accounts payable		$656000
	(To record manufacturing overhead costs incurred)
d.	Work in process- Refining	$475000
	Work in process- Blending	$118000
	Manufacturing overhead		$593000
	(To record manufacturing overhead applied)
e.	Work in process- Blending	$682000
	Work in process- Refining		$682000
	(To record units transferred to blending department)
f.	Finished goods	$730000
	Work in process- Blending		$730000
	(To record cost of goods manufactured)
g(1)	Accounts receivable	$1450000
	Sales		$1450000
	(To record sales on account)
g(2)	Cost of goods sold	$660000
	Finished goods inventory		$660000
	(To record cost of goods sold)

2)

Accounts Receivable					Raw Materials
Beg. Bal.					Beg. Bal.	$209600
g(1)	$1450000						189600	a.
End. Bal.	$1450000				End. Bal.	$20000
Work in Process- Refining Department					Work in Process- Blending Department
Beg. Bal.	$33000				Beg. Bal.	$44000
a.	144600	682000	e.		a.	45000	730000	f.
b.	68200				b.	17300
d.	475000				d.	118000
					e.	682000
End. Bal.	$38800				End. Bal.	$176300
Finished Goods					Manufacturing Overhead
Beg. Bal.	$19000				Beg. Bal.
f.	730000	660000	g(2)		c.	656000	593000	d.
End. Bal.	$89000				End. Bal.	63000
Accounts Payable					Salaries and Wages Payable
Beg. Bal.					Beg. Bal.
		656000	c.				85500	b.
End. Bal.		656000			End. Bal.		85500
Sales					Cost of Goods Sold
Beg. Bal.					Beg. Bal.
		$1450000	g(1)		g(2)	660000
End. Bal.		$1450000			End. Bal.	660000