Question

Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where it is spun into yarn. The output of the Spinning Department is transferred to the Tufting Department, where carpet backing is added at the beginning of the process and the process is completed. On January 1, Port Ormond Carpet Company had the following inventories:

Finished Goods	$62,000
Work in Process-Spinning Department	35,000
Work in Process-Tufting Department	28,500
Materials	17,000

Departmental accounts are maintained for factory overhead, and both have zero balances on January 1. Manufacturing operations for January are summarized as follows:

Jan.	1	Materials purchased on account, $500,000
	2	Materials requisitioned for use:
		Fiber-Spinning Department, $275,000
		Carpet backing-Tufting Department, $110,000
		Indirect materials-Spinning Department, $46,000
		Indirect materials-Tufting Department, $39,500
	31	Labor used:
		Direct labor-Spinning Department, $185,000
		Direct labor-Tufting Department, $98,000
		Indirect labor-Spinning Department, $18,500
		Indirect labor-Tufting Department, $9,000
	31	Depreciation charged on fixed assets:
		Spinning Department, $12,500
		Tufting Department, $8,500
	31	Expired prepaid factory insurance:
		Spinning Department, $2,000
		Tufting Department, $1,000
	31	Applied factory overhead:
		Spinning Department, $80,000
		Tufting Department, $55,000
	31	Production costs transferred from Spinning Department to Tufting Department, $547,000
	31	Production costs transferred from Tufting Department to Finished Goods, $807,200
	31	Cost of goods sold during the period, $795,200

	Required:
1.	Journalize the entries to record the operations, using the dates provided with the summary of manufacturing operations. Refer to the Chart of Accounts for exact wording of account titles.
2.	Compute the January 31 balances of the inventory accounts.*
3.	Compute the January 31 balances of the factory overhead accounts.*
*	Enter your amounts in positive value.

CHART OF ACCOUNTS
Port Ormond Carpet Company
General Ledger
ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 141 Work in Process-Spinning Department 142 Work in Process-Tufting Department 151 Factory Overhead-Spinning Department 152 Factory Overhead-Tufting Department 161 Finished Goods 171 Supplies 172 Prepaid Insurance 173 Prepaid Expenses 181 Land 191 Factory 192 Accumulated Depreciation-Factory LIABILITIES 210 Accounts Payable 221 Utilities Payable 231 Notes Payable 236 Interest Payable 251 Wages Payable EQUITY 311 Common Stock 340 Retained Earnings 351 Dividends 390 Income Summary	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Goods Sold 520 Wages Expense 531 Selling Expenses 532 Insurance Expense 533 Utilities Expense 534 Supplies Expense 540 Administrative Expenses 561 Depreciation Expense-Factory 590 Miscellaneous Expense 710 Interest Expense

1. Journalize the entries to record the operations, using the dates provided with the summary of manufacturing operations. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
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2. Compute the January 31 balances of the inventory accounts. Enter your amounts in positive value.

Materials
Work in Process:
• Spinning Department
• Tufting Department
Finished Goods

3. Compute the January 31 balances of the factory overhead accounts. Enter your amounts in positive value.

Factory Overhead:
• Spinning Department
• Tufting Department

Answer 1

Jan-01	Materials	500000
	Accounts payable		500000
Jan-02	Work in progress Spinning Department	275000
	Work in progress Tufting Department	110000
	Factory overheads -spinning department	46000
	Factory overheads -Tufting department	39500
	materials		470500
Jan-31	Work in progress Spinning Department	185000
	Work in progress Tufting Department	98000
	Factory overheads -spinning department	18500
	Factory overheads -Tufting department	9000
	Wages payable		310500
Jan-31	Factory overheads -spinning department	12500
	Factory overheads -Tufting department	8500
	Accumulated depreciation-factory		21000
Jan-31	Factory overheads -spinning department	2000
	Factory overheads -Tufting department	1000
	Prepaid insurance		3000
Jan-31	Work in progress Spinning Department	80000
	Work in progress Tufting Department	55000
	Factory overheads -spinning department		80000
	Factory overheads -Tufting department		55000
Jan-31	Work in progress Tufting Department	547000
	Work in progress Spinning Department		547000
Jan-31	Finished goods inventory	807200
	Work in progress Tufting Department		807200
Jan-31	Cost of goods sold	795200
	Finished goods inventory		795200
2		Material	Work in progress		Finished goods
			Spinning department	Tufting department
	Beginning	62000	35000	28500	17000
Add	Added during period	500000	540000	810000	807200
Less	Used during period	470500	547000	807200	795200
	Ending balance	91500	28000	31300	29000
3	Factory overheads	Spinning department	Tufting department
	Applied	80000	55000
	Actual
	Material	46000	39500
	Labor	18500	9000
	Depreciation	12500	8500
	Insurance	2000	1000
	Total	79000	58000
	Balance	1000	3000
		Credit	Debit