Question

Tough Hardware purchases raw materials and processes those purchases through a receiving/inspection process prior to stocking for production Tough places 3 purchase orders for materials for production and receives the goods that day. The first PO is for 2,500 1/2" x 96 milling blanks $2.75 each. The second Po is for 4,000 pieces of 48" x 96" x 1" sheet steel at $15,95 each. The third Po is for five 5-gallon drums of miling lubrication oil at $475.00 per barrel. The receiving/rspection process is completed and the goods are transferred from Receiving Inventory to Raw Materials. The Receiving/Inspection Department assigns manufacturing overhead of $55.00 per purchase order as well as $2.75 per piece on metal goods and $35.00 per container on fluids. Al labor is allocated through overhead. Prepare the journal entries to do the following: a. Purchase and receive these items to Receiving Inventory on account. . Assign overhead to the metal goods. Assign overhead to the fluid goods o R. P H K B. IN M M

Answer 1

Journal Entries 71450 71450 17985 17985 (A) I Purchase and receive these items to Receiving Inventory on account, Receiving Inventory TO Accounts Payable (Purchase and Recive Items) (B) Assign overhead to the retal goods" Reciving Inventory To Manufacturing overhead ( Assign over heads to retal goods) 10) Assign, overhead to the fluid goods: Receiving Inventory To manufacturing overhead Assign overhead to fluid goods) (D) Transfer all goods to Raw Mate- rials Inventory Row Material Inventory To receiving Inventory (trausfer of all goods to Raw Material Inventory 175 175 89610 896 10

1 • Working Notes . (A) Receiving Inventory - 2500 x 2.75 + 4000 X 15:55 t 58475 => 7 71450 (B) Manufacturing overleds Creetal Goods) (2500 X 2.75+ 55) +(4089 x 2.754 ) 17985 ) (c) Manufacturing overheads ( fluid goods) 35 X 5 => 1175 (D) Raw Materials Inventory = (6875 + 6930) + (62200 +11055) +2375 +175) 89610 .. for Aux queries please corrent