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 31,400 Completed and transferred to Blending 2 Materials Direct labor Overhead March 31 balance 155,600 68,200 480,000 2 The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,800; direct labor, $3,800; and overhead, $19,800. Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor $17,400; and overhead cost applied to production, $118,000. 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, $646,000. (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, $642,000. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $800,000

Answer 1

Journal Entries : Transallim Gene ral Journal Debit Credit a. $155600 $ 45ooo $200600 Work in Process inventory - refining Work in Process inventory - blending Raw material inventory Work in Process inventory - defining Work in Process inventory - blending Salaries and wages Payable b. $ 68200 $ 17400 | $85600 C. Manufacturing overhead $646000 $646.000 Accounts Payable d. $480000 $118000 $598000 e. Work in Process inventory - refining Work in Process inventory blending Manufacturing overhead Work in Process inventory - blending Work in process inventory - defining finished goods inventory beating Work in Process inventory blending $642000 $642000 $800000 f $800000 $1450000 9. Accounts Receivable sales $1450 000 $ 610000 Cost of Goods sold Finished goods inventory $610000

Posting the Joumal entries from to T-accounts: Accounts Receivable Beg. Bal. Sales (8) $14 Soooo Ending Bal $1450 ood Beg. Bal Raw Materials Inventory |$210600 $155600 Work in Process - Refinining #45000 Work in Prouess-Blending $10000 End. Bal Beg.Bal. Work in Process - Refining Department $31400 $642000 Work in Process - Blending Raw material Inventory $155600 Salaries and gen Payable I Wages 68200 Manufacturing overhead $430000 End. Bal. $93200 Work in Process - Blending Depaulment $ 56000 $4 S000 $800000 (Beg. Bal. finished Goods Raw material Inventory Salaries and Images Payable $17400 Manufacturing over head $118000 work in Process - Refining $642000 $78400 End. Bal.

Finished Goods Beg. Bal. $24000 Work in Process. Blending End Bal 1$800 000 $610000 Cost of Goods sold $214000 Beg. Bal. Manufacturing overhead $480000 Work in Process - Refining $646.00 $118000 Work in Process - Blending | Accounts Payable End. Bal. $ 48000 Beg. Bal. Accounts Payable 14646000 Manufacturing overhead End. Bal. that there are $646000 Sales Beg. Bal. $1450000 Accounts Receivable End. Bal. $1450000 | Beg. Bal. Salaries and Wages Payable 14 17400 Work in Process - Blending | $68200 Work in Process- Refining $85600 End Bal Cost of Goods sold Beg. Bal. Finished Goods $610000 End. Balo $610000