Question

Lubricants, Inc. produces a speclal 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 availla ble for the Refining Department for March: Work in Process-Refining Department March 1 balance 32,600 Completed and transferred to Blending Materials 139.608 Direct labor 63.200 489.000 Overhead March 31 balance The March 1 work In process inventory In the Refining Department consists of the following elements: materlals, $7700; direct labor $3,900; and overhead, $21,000. Costs Incurred during March In the Blending Department were: materlals used, $46,000; direct labor, $17,200; and overhead cost appled to production, $114,000 Required: 1. Prepare Journal entrles 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 materlals used In production. b. Direct labor costs Incurred. c. Manufacturing overhead costs Incurred for the entire factory, $686,000. (Credit Accounts Payable.) d. Manufacturing overhead was appled 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. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $700.000 g. Completed units were sold on account, $1,340,000. The Cost of Goods Sold was $680,000. 2 Post the Journal entries from () above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance In the Refining Department's Work In Process Is glven in the T-account shown above.) $288,600 41,eee 30,e08 Raw materials Work in process-Blending Departnent Finished goods

Answer 1

Work in Process - Refining Department Completed and transferred to March 1 Balance 32,600 642,000 blending Materials 139,600 Direct labor 63,200 Overhead 489,000 March 31 Balance 82,400

Journal Entries Account titles and Explanation Debit Credit Event Work in Process - Refining Department a. 139,600 Work in Process Blending Department 46,000 Raw Materials 185,600 (to record raw materials used in production) Work in Process Refining Department b. 63,200 Work in Process Blending Department 17,200 Salaries and wages payable 80,400 (to record direct materials used in production) Manufacturing Overhead Accounts Payable (to record Manufacturing overhead incurred) 686,000 C. 686,000 Work in Process Refining Department d. 489,000 Work in Process Blending Department 114,000 Manufacturing Overhead (to record manufacturing overhead applied in production) 603,000 Work in Process Blending Department 642,000 e. Work in Process Refining Department 642,000 (to record transfer of completed units from refining to Blending) f. Finished goods 700,000 Work in Process - Blending Department 700,000 (to record transfer of completed units from Blending to finished goods) O

Accounts receivable 1,340,000 Sales 1,340,000 (to record the sales on account) Cost of goods sold Finished goods (to record cost of goods sold) 680,000 680,000

Account Receivable Raw Materials Beg, Bal 208,600 185,600 a 1,340,000 g. End Bal. End Bal 1,340,000 23,000 Work in Process- Refining Deparment Work In Process - Blending Department Beg, Bal 32,600 Beg, Bal 41,000 642,000 e 46,000 700,000 f. 139,600 a a b. b. 63,200 17,200 d. d. 489,000 114,000 End Bal 82,400 642,000 e. End Bal 160,200 Manufacturing Overhead Finished Goods Beg, Bal f. 30,000 680,000 g 603,000 d 700,000 686,000 C. End Bal End Bal 50,000 83,000 Accounts Payable Salaries and Wages Payable 80,400 b 686,000 c. End.Bal End Bal 80,400 686,000 Sales Cost of goods sold 1,340,000 g. 680,000 g. End.Bal End.Bal 1,340,000 680,000