Question

Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March. Account Work in Process—Papermaking Department Account No. Date Item Debit Credit Balance Debit Credit Jan. 1 Bal., 7,300 units, 20% completed 18,688 31 Direct materials, 38,900 units 62,240 80,928 31 Direct labor 19,170 100,098 31 Factory overhead 10,776 110,874 31 Goods transferred, 43,400 units ? ? 31 Bal., 2,800 units, 30% completed ? a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production. a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank. a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar. b. Determine the Work in Process—Papermaking Department March 31 balance. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.

Answer 1

a.

Event	Date	Description	Debit	Credit
1	Mar. 31	Work in Process—Papermaking Department	62,240
		Materials-Plup		62,240
2	Mar. 31	Work in Process—Papermaking Department	29,946
		Wages Payable		19,170
		Factory Overhead—Papermaking Department		10,776
3	Mar. 31	Work in Process—Converting Department	105,806
		Work in Process—Papermaking Department		105,806

* Supporting calculation:-

Cost of 43,400 transferred-out units:

Inventory in process, Mar. 1	18,688
Cost to complete Mar. 1 inventory: [5,840 units × $0.70/unit (see calculations below]	4,088
Units started and completed in Mar. [36,100 units × ($1.60 + $0.70)]	83,030
Transferred to Converting Department	105,806

Supporting equivalent unit and cost per equivalent unit calculations:

Particulars	Whole Units	Equivalent Units
		Materials	Conversion
Inventory in process, Mar. 1 (20% completed)	7,300		5,840
Started and completed in Mar.	36,100	36,100	36,100
Transferred to Converting Department in Mar.	43,400	36,100	41,940
Inventory in process, Mar. 31 (30% completed)	2,800	2,800	840
Total	46,200	38,900	42,780

$\small Cost\: per\: equivalent\: unit\: of\: materials:\frac{62,240}{38,900}=1.60\: per\: unit$

$\small Cost\: per\: equivalent\: unit\: of\: Conversion:\frac{29,946}{42,780}=0.70\: per\: unit$

b. Work in Process—Papermaking Department March 31 balance:-

Particulars	Calculation	Amount
Direct materials	2,800 * 1.60	4,480
Conversion	840 * 0.70	588
	Total	5,068