Question

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods	$13,500
Work in Process-Making	6,790
Work in Process-Packing	7,350
Materials	5,100

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

Jul.	1	Materials purchased on account, $149,800
	2	Materials requisitioned for use:
		Phosphate—Making Department, $105,700
		Packaging—Packing Department, $31,300
		Indirect materials—Making Department, $4,980
		Indirect materials—Packing Department, $1,530
	31	Labor used:
		Direct labor—Making Department, $32,400
		Direct labor—Packing Department, $40,900
		Indirect labor—Making Department, $15,400
		Indirect labor—Packing Department, $18,300
	31	Depreciation charged on fixed assets:
		Making Department, $10,700
		Packing Department, $7,900
	31	Expired prepaid factory insurance:
		Making Department, $2,000
		Packing Department, $1,500
	31	Applied factory overhead:
		Making Department, $32,570
		Packing Department, $30,050
	31	Production costs transferred from Making Department to Packing Department, $166,790
	31	Production costs transferred from Packing Department to Finished Goods, $263,400
	31	Cost of goods sold during the period, $265,200

	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 July 31 balances of the inventory accounts.
3.	Compute the July 31 balances of the factory overhead accounts. CHART OF ACCOUNTSPreston & Grover Soap CompanyGeneral Ledger ASSETS 110 Cash 121 Accounts Receivable 125 Notes Receivable 126 Interest Receivable 131 Materials 141 Work in Process-Making Department 142 Work in Process-Packing Department 151 Factory Overhead-Making Department 152 Factory Overhead-Packing 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

Answer 1

1) Journal entries:
Date	Account titles and Explanations	Debit	Credit
1-Jul	Materials	149800
	Accounts payable		149800
	(materials bought on account)
2-Jul	WIP Making department	105700
	WIP Packing department	31300
	Factory OH - Making department	4980
	Factory OH - Packing department	1530
	Materials		143510
	(materials issued for production)
31-Jul	WIP Making department	32400
	WIP Packing department	40900
	Factory OH - Making department	15400
	Factory OH - Packing department	18300
	Wages payable		107000
	(labor cost incurred)
31-Jul	Factory OH - Making department	10700
	Factory OH - Packing department	7900
	Accumulated depreciation-Factory		18600
	(depreciation for the month)
31-Jul	Factory OH - Making department	2000
	Factory OH - Packing department	1500
	Prepaid insurance		3500
	(Expired insurance)
31-Jul	WIP Making department	32570
	WIP Packing department	30050
	Factory OH - Making department		32570
	Factory OH - Packing department		30050
	(OH applied to production)
31-Jul	WIP Packing department	166790
	WIP Making department		166790
	(transfer of production)
31-Jul	Finished goods	263400
	WIP Packing department		263400
	(finished goods transferred)
31-Jul	Cost of goods sold	265200
	Finished goods		265200
	(cost of goods sold accounted)

2) July 31, Inventory balances:
	Materials	WIP	WIP	Finished
		Making	Packing	goods
Beginning balance	5100	6790	7350	13500
Debit	149800	170670	269040	263400
Credit	143510	166790	263400	265200
Ending balance	11390	10670	12990	11700
3) FOH Account balances as on July 31:	FOH	FOH
	Making	Packing
	Department	Department
Beginning balance	0	0
Debit	33080	29230
Credit	32570	30050
Ending balance	510	-820