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 1 balance 33,700 Completed and transferred to Blending Materials 145,600 Direct labor 70, 200 Overhead 486,000 March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,600; direct labor, $4,400, and overhead, $21,700. Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $17,500; and overhead cost applied to production, $113,000. Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below. a. Raw materials used in production. b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire factory, $696,000. (Credit Accounts Payable.) d. Manufacturing overhead was applied to production using a predetermined overhead rate. e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $642.000. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $760,000. g. Completed units were sold on account, $1,490,000. The Cost of Goods Sold was $600,000

Answer 1

No Credit ($) a General Journal Work in process Inventory - Refining Work in process Inventory - Blending Raw material Inventory Debit ($) 145600 46000 191600 b Work in process Inventory - Refining Work in process Inventory - Blending Salaries and wages payable 70200 17500 87700 с 696000 Manufacturing Overhead Account Payable 696000 d Work in process Inventory - Refining Work in process Inventory - Blending Manufacturing Overhead 486000 113000 599000 e 642000 Work in process Inventory - Blending Work in process Inventory - Refining 642000 f 760000 Finished goods inventory Work in process Inventory - Blending 760000 1490000 Account receivable Sales 1490000 8 600000 Cost of goods sold Finished goods inventory 600000

Account receivable Beg Bal. 8 End Bal Raw material Inventory Beg Bal. 206600 191600 End Bal 15000 a 1490000 1490000 a e a Work in process Inventory - Refining Beg Bal. 33700 145600 642000 b 70200 d 486000 End Bal 93500 Work in process Inventory - Blending Beg Bal. 53000 46000 760000 f b 17500 d 113000 642000 End Bal 111500 e Finished goods inventory Beg Bal. 29000 f 760000 600000 End Bal 189000 Manufacturing Overhead Beg Bal. 696000 599000 End Bal 97000 8 d Account Payable 696000 696000 End Bal с Salaries and wages payable 87700 b 87700 End Bal Cost of goods sold 600000 600000 Sales 1490000 8 1490000 End Bal End Bal

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