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Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials...


Harrelson Company manufactures pizza sauce through two production departments: Cooking and Canning. In each process, materials and conversion costs are incurred evenly throughout the process. For the month of April, the work in process accounts show the following debits.

   
Cooking
 
Canning
Beginning work in process   $0   $4,710
Materials   22,030   10,200
Labor   8,740   8,020
Overhead   32,760   28,340
Costs transferred in       55,850

Journalize the April transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Concepts and reason

The concept used to solve this problem is transactions.

Transactions: It refers to an event which is having a monetary influence on the Company’s financial statements. Accounting records contain the accounting transactions. For example, the sale of goods for cash or sale of goods on credit to the customer.

Journal Entry: Journalizing is the process of recording of transactions in the book of original entry. It gives a complete picture of a business transaction. It is recorded in chronological order. It is the pre- phase for the preparation of ledgers.

Fundamentals

Rules of Debit and Credit: The rules of the debit and credit are given below:

1. Those accounts that have a debit balance will increase when the amount is recorded to the debit side and will decrease when the amount is recorded to the credit side.

2. Those accounts that have a credit balance will increase when the amount is recorded to the credit side and will decrease when the amount is recorded to the debit side.

Inventory: Inventory refers to the material or goods that are held by the organizations with a motive of selling it. It includes various categories that are work in process, finished goods, and raw material.

Raw material inventory: The inventory which is purchased from the supplier for the purpose of using it as an ingredient while manufacturing the product. The inventory which is directly issued for production are direct material and which is indirectly issued to the production process are indirect material. The inventory at which no production activity is performed is raw material inventory.

Work-in-progress (WIP) inventory: The inventory at which some percentage of production activity has been performed is WIP inventory. It is the inventory which is not 100% completed for the final consumption.

Manufacturing Overheads: Manufacturing Overheads are the aggregate of indirect material, indirect labor and indirect expenses which are incurred during production of finished goods in the factory. These are the cost which cannot directly belong to a particular unit of a product.  

Prepare journal entry related to the materials used which are given below:

JOURNAL
Date Account Title and Explanation
WIP-Cooking
WIP-Canning
Apr-30
Raw material inventory
|(To record the materials us

Prepare journal entry related to the factory labor cost transferred which is given below:

Date
JOURNAL
Account Title and Explanation
WIP-Cooking
WIP-Canning
Factory Labor
|(To record the factory labor to production)

Prepare journal entry related to the manufacturing overheads transferred which are given below:

Date
JOURNAL
Account Title and Explanation
WIP-Cooking
WIP-Canning
Manufacturing Overhead
|(To record the transfer of overhea

Prepare journal entry related to the transfer of Cooking costs to Canning costs which are given below:

Date
JOURNAL
Account Title and Explanation
WIP-Canning
WIP-Cooking
(To record the transfer of costs)
Post ref Debit ($) Credi

Ans:

JOURNAL
Date Account Title and Explanation
WIP-Cooking
WIP-Canning
Apr-30
Raw material inventory
|(To record the materials us

Date
JOURNAL
Account Title and Explanation
WIP-Cooking
WIP-Canning
Factory Labor
|(To record the factory labor to production)

Date
JOURNAL
Account Title and Explanation
WIP-Cooking
WIP-Canning
Manufacturing Overhead
|(To record the transfer of overhea

Date
JOURNAL
Account Title and Explanation
WIP-Canning
WIP-Cooking
(To record the transfer of costs)
Post ref Debit ($) Credi

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