Question

ighthouse 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., 7,900 units, 60% completed					12,008
	31	Direct materials, 42,100 units	79,990				91,998
	31	Direct labor	22,710				114,708
	31	Factory overhead	12,778				127,486
	31	Goods transferred, 47,000 units			?		?
	31	Bal., 3,000 units, 70% 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

Date	Accounts Titles and Explanation	Debit	Credit
a1	Work in Process - paper making department	79,900
	Raw Materials		79,900
a2	Work in Process - paper making department	35488
	Wages Payable		22710
	Manufacturing overheads		12778
a3	Work in Process - conversion department	120106
	Work in Process - paper making department		120106

b

WIP

7380

Workings:

Equivalent Units - FIFO Method
	Direct Materials			Conversion Costs
	Units	%	Equivalent units	Units	%	Equivalent units
Opening WIP	7900
Units started and completed	42100
Total units accounted for	50000
Opening WIP	7900				40%	3160
Completed and transferred	39100	100%	39100	39100	100%	39100
Closing WIP	3000	100%	3000	3000	70%	2100
Equivalent Units	50000		42100			44360

	Direct Materials	Conversion Costs
Units started and completed	79,990	35488
Total Cost	79,990	35,488
Equivalent Units	42100	44360
Equivalent Cost per unit	1.9	0.8

	Direct Materials	Conversion Costs	Total
Opening WIP		12008
Units started and completed	74290	33808
	[39100*1.9]	[42260*0.8]
Completed and transferred Cost	74290	45816	120106
Closing WIP	5700	1680	7380
	[3000*1.9]	[2100*0.8]