Question

1. Purchased $24,500 of materials on account.

2. Issued $1,450 of supplies from the materials inventory.

3. Purchased $25,900 of materials on account.

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $30,900 in direct materials to the production department.

6. Incurred direct labor costs of $29,500, which were credited to Wages Payable.

7. Paid $22,400 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.

8. Applied overhead on the basis of 120 percent of direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $5,900.

The following balances appeared in the accounts of Sunset Products for March.

	Beginning			Ending
Materials Inventory	$	10,350			?
Work-in-Process Inventory		17,400			?
Finished Goods Inventory		65,900		$	37,400
Cost of Goods Sold					73,900

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Answer 1

Below is the solution, please comment if any further explanation needed

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	General Journal		Debit	Credit
1	Materials Inventory	Dr.	24,500
	Accounts payable			24,500
2	Manufacturing overhead control	Dr.	1,450
	Materials inventory			1,450
3	Materials inventory	Dr.	25,900
	Accounts payable			25,900
4	Accounts payable	Dr.	24,500
	Cash			24,500
5	Work-in-process - Direct Materials	Dr.	30,900
	Materials inventory			30,900
6	Work-in-process - Direct Labor	Dr.	29,500
	Wages payable			29,500
7	Manufacturing overhead control	Dr.	22,400
	Cash			22,400
8	Work-in-process - overhead	Dr.	35,400
	Applied manufacturing overhead			35,400
9	Manufacturing overhead control	Dr.	5,900
	Accumulated depreciation - property, plant and equiment			5,900

* Applied overhead = 120% of $29,500 = 35,400

Material Inventory
Particular	Amount	Particular	Amount
Beginning Balance	10,350
1	24,500	2	1,450
3	25,900	5	30,900
Ending Balance	28,400
Work-in-process Inventory
Particular	Amount	Particular	Amount
Beginning Balance	17,400
5	30,900	Finished Goods	45,400
6	29,500
8	35,400
Ending Balance
Manufacturing Overhead Control
Particular	Amount	Particular	Amount
Beginning Balance
2	1,450
7	22,400
9	5,900
Ending Balance	29,750
Applied Manufacturing Overhead
Particular	Amount	Particular	Amount
Beginning Balance
		8	35,400
Ending Balance			35,400
Accounts Payable
Particular	Amount	Particular	Amount
Beginning Balance
4	24,500	1	24,500
		3	25,900
Ending Balance			25,900
Cash
Particular	Amount	Particular	Amount
Beginning Balance
		4	24,500
		7	22,400
Ending Balance			46,900
Wages Payable
Particular	Amount	Particular	Amount
Beginning Balance
		6	29,500
Ending Balance			29,500
Accumulated Depreciation - Property, Plant, Equipment
Particular	Amount	Particular	Amount
Beginning Balance
		9	5,900
Ending Balance			5,900
Finished Goods Inventory
Particular	Amount	Particular	Amount
Beginning Balance	65,900
Goods Completed	45,400	Transfer to Cost of Goods Sold	73,900
Ending Balance	37,400
Cost of Goods Sold
Particular	Amount	Particular	Amount
Beginning Balance
Finished Goods Inventory	73,900
Ending Balance	73,900

Materials inventory: 10,350 +24,500 + 25,900-1,450-30,900 = 28,400

Finished Goods Inventory: 73,900+37,400-65,900 = 45,400