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	35,400	Completed and transferred to Blending	?
Materials	138,600
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, $9,000; direct labor, $4,600; and overhead, $21,800.

Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $17,600; and overhead cost applied to production, $104,000.

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.

1. Raw materials used in production.
2. Direct labor costs incurred.
3. Manufacturing overhead costs incurred for the entire factory, $706,000. (Credit Accounts Payable.)
4. Manufacturing overhead was applied to production using a predetermined overhead rate.
5. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $652,000.
6. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $730,000.
7. Completed units were sold on account, $1,470,000. The Cost of Goods Sold was $620,000.

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	$	213,600
Work in process—Blending Department	$	44,000
Finished goods	$	29,000

Required 1 Required 2 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 (9) below. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet < 1 2 3 4 5 6 7 8 > Record issuance of raw materials to Refining and Blending Department. Note: Enter debits before credits. Transactions General Journal Debit Credit a. Record entry Clear entry View general journal < Required 1 Required 2 >

Answer 1

Debit credit Transactions General Journal Work in process- Refining Department $138,600 Work in Process. Blending Department & 44,000 Raw Materials (to record issuance of raw materials $182,600 b. Work in Process-Refining Department $ 70,200 Work in Process - Blending Department & 17,600 Salaries and wages Payable $ 87,800 (to record direct labor cost incurred) Manufacturing overhead $ 706,000 Accounts Payable ( (Yo record manufacturing expenses) d(1) Work in Process - Refining Department $486,00 Manufacturing Overhead $486,000 (Yo record overhead cost applied) $ 706,000 000 dlas work in Process- Blending Department $ 104,000 Manufacturing Overhead $ 104,000 140 second overhead cost applied)

es work in proces- Blending Department 8652,000 Work in Process- Refining Department to reword transfer of semifinished units) $652,000 f finished Goods $730,000 $730,000 Work in process - Blending Department Ho letold transfer of completed wits) $ $1,470,000 g01) Amounts Receivable Sales (o record sales on account) $1,470,000 $620,000 g(2) cost of Goods sold finished Goods (to record cost of goods sold) $ 620,000 (2) Accounts Receivable Hugs $1,470,000 Raw Materials Beg Bal $213,600 a, & 182,600 End Bal. $ 31,000

Work in proces Work in process Refining Department Blending Department Beg Bal. $ 35,00 ca b tas $ 138, bookes &652,000 1$ 70,200 $486,000 Beg. Bale $44,000 (as $44,000 $ $ 730,000 (b) $ 17,600 (d, $104,000 ces $652,000 End. Bat. 1$78,200 End: Bale $ 131,600 finished Goods Beg Bal & 29,000 Manufacturing Overhead $706,000 (d, $590,000 $730,000 (g & 620,000 End Bal. $ 116,000) End. Bal $139,000 Accounts Payable (6 $706,000 Salaries and wages Payable 6 & 87,800 Sales igs $1,470,000 Cost of Goody Sold gs $620,000 Calculation: (d, Manufacturing overhead = (Manufacturing overhead Refining Department & Manufacturing Overhead Blending Department) $ 486,000 + $ 104,000 -- $ 590,000