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 32,500 Completed and transferred to Blending 140,600 79,200 472,000 ? The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,300; direct labor. $4,000; and overhead, $21,200. Costs incurred during March in the Blending Department were: terials used, $44,000, direct labor. $17.000. and overhead cost applied to production, $103,000. 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. 5 a. Raw materials used in production b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire factory, 5666,000. (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, $672.000 f. Units that were complete with respect to processing in the Blending Department were transferred to finished Goods, 5780,000. 9. Completed units were sold on account. $1.450,000. The Cost of Goods Sold was $670,000. 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department's Work in Process is given in the T-account shown above.) Raw materials Work in process-Blending Department Finished goods $ 205,600 $ 50,000 $ 23,000 Comlete this onestien hy enterinn nur answers in the tabs below.

Answer 1

1. Journal Entries

Journal Entries Description S.No. Debit ($) Credit ($) a Work-in-Process Inventory - Refining Work-in-Process Inventory - Blending Raw Material Inventory 140,600 44,000 184,600 b Work-in-Process Inventory - Refining 79,200 17,000 Work-in-Process Inventory - Blending Salaries and Wages Payable 96,200 с 666,000 Manufacturing Overhead Accounts Payable 666,000 d Work-in-Process Inventory - Refining Work-in-Process Inventory - Blending Manufacturing Overhead 472,000 103,000 575,000 e 672,000 Work-in-Process Inventory - Blending Work-in-Process Inventory - Refining 672,000 f 780,000 Finished Goods Inventory Work-in-Process Inventory - Blending 780,000 1,450,000 Accounts Receivables Sales 1,450,000 670,000 Cost of Goods Sold Finished Goods Inventory 670,000

2. Accounts

206,600 Raw Material Inventory Begining Balance Raw Material used in Production (a) Ending Balance 184,600 22,000 Manufacturig Overhead Begining Balance Manufacturing Overhead Incurred on account o Manufacturing Overhead Applied (d) Ending Balance 666,000 575,000 91,000 Accounts Payable Begining Balance Manufacturing Overhead © Ending Balance 666,000 666,000 Salaries and Wages Payable Begining Balance Work-in-Process Inventory - Refining Work-in-Process Inventory - Blending Ending Balance 79,200 17,000 96,200 Sales Begining Balance Accounts Receivables (8) Ending Balance 1,450,000 1,450,000 Cost of Goods Sold Begining Balance Finished Goods Inventory (8) Ending Balance 670,000 670,000

Cost of Goods Sold Begining Balance Finished Goods Inventory (8) Ending Balance 670,000 670,000 Accounts Receivables Begining Balance Sales of Good (g) Ending Balance 1,450,000 1,450,000 Finished Goods Inventory Begining Balance 23,000 780,000 Work-in-Process Inventory - Blending (f) Cost of Goods Sold (8) Ending Balance 670,000 133,000 Work-in-Process Inventory - Refining Begining Balance 32,500 Raw Material Inventory (a) 140,600 Salaries and Wages Payable (b). 79,200 Manufacturing Overhead (d) 472,000 Work-in-Process Inventory - Blending Ending Balance 52,300 672,000 Work-in-Process Inventory - Blending Begining Balance 50,000 Raw Material Inventory (a) 44,000 Salaries and Wages Payable (b). 17,000 Manufacturing Overhead (d) 103,000 Work-in-Process Inventory - Refining 672,000 Finished Goods Inventory (f) Ending Balance 106,000 780,000