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 Work in Process-Refining Department 38,000 Completed and transferred to Blonding 495,000 72,000 181,000 Materials Direct labor Overhead March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $25,000; direct labor, $4,000; and overhead, $9,000. Costs incurred during March in the Blending Department were: materials used, $115,000; direct labor, $18,000; and overhead cost applied to production, $42,000. 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, $225,000. (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, $740,000 f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $950,000 g. Completed units were sold on account, $1,500,000. The Cost of Goods Sold was $900,000

Answer 1

JORNAL ENTRIES

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
a	Work in process- Refining Dept.	495,000
	Work in Process- blending Dept.	115,000
	Raw Material inventory		610,000
	(to record material used in production)

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
b	Work in process- Refining Dept.	72,000
	Work in Process- blending Dept.	18,000
	Salaries and Wages Payable		90,000
	(to record direct labor cost incurred)

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
c	Manufacturing overhead	225,000
	Accounts Payable		225,000
	(to record manufacturing overhead incurred)

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
d	Work in process- Refining Dept.	181,000
	Work in Process- blending Dept.	42,000
	Manufacturing Overhead		223,000
	(to apply manufacturing overhead)

TRANSACTIONS	GENERAL JOURNAL	DEBIT ,IN$)	CREDIT (In$)
e	Work in Process- blending Dept.	740,000
	Work in Process - Refining Dept.		740,000
	(being units completed in refining transfered to blending)

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
f	finished goods Inventory	950,000
	Work in Process- blending Dept.		950,000
	( units completed in blending transfered to finished goods)

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
g1	Accounts Receivables	1,500,000
	Sales Revenue		1,500,000
	(to record sales on account)

TRANSACTIONS	GENERAL JOURNAL	DEBIT (IN$)	CREDIT (In$)
g2	Cost of Goods Sold	900,000
	Finished goods inventory		900,000
	(to record cost of goods sold)

ANSWER2

Accounts Receivable

Sales on Account	$1,500,000
ENDING BALANCE	$1,500,000

Raw Materials

Beginning Balance	$618,000	Raw Material	$610,000
ENDING BALANCE	$8,000

Work in Process - Refining Dept.

Beginning Balance	$38,000	Work in Process	$740,000
Raw Material	$495,000
Work in Process	$72,000
Work in Process	$181,000
ENDING BALANCE	$46,000

Work in Process - Blending Dept.

Beginning Balance	$65,000	Transaction f	$950,000
Transaction a	$115,000
Transaction b	$18,000
Transaction d	$42,000
Transaction e	$740,000
ENDING BALANCE	$30,000

Finished goods

Beggining Balance	$20,000	Transaction g2	$900,000
Transaction f	$950,000
ENDING BALANCE	$70,000

Manufacturing Overhead

Transaction c	$225,000	Transaction d	$223,000
ENDING BALANCE	$2,000

Accounts Payable

		Transaction c	$225,000

Salaries and Wages Payable

		Transaction b	$90,000

Sales

		Transaction g1	$1,500,000

Cost of Goods Sold

Transaction g2	$900,000

Calculation of Manufacturing Overhead= Manufacturing overhead of Refining Department + Manufacturing overhead of Blending Department

=$181,000+$42,000

=$223,000

hope you got the answer

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