Backflush costing (similar to Self-Study Problem 2)
Nicole A. Inc. uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products.
Required:
1. Prepare journal entries, if needed, to account for the following transactions.
a. Purchased raw materials on account, $150,000.
b. Requisitioned raw materials to production, $150,000.
c. Distributed direct labor costs, $25,000.
d. Incurred manufacturing overhead costs, $100,000. (Use Various Credits for the credit part of the entry.)
e. Cost of products completed, $275,000.
f. Completed products sold for $400,000, on account.
2. Prepare any journal entries that would be different from the above, if the only trigger points were the purchase of materials and the sale of finished goods.
Reference:
Journal Entries for Backflush Costing
Quickest Manufacturing Co.
Quickest uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and the sale of completed products.
The following transactions occurred during the period:
a. Purchased raw materials on account, $75,000.
b. Requisitioned raw materials to production, $75,000.
c. Distributed direct labor costs, $12,500.
d. Incurred manufacturing overhead costs, $50,000. (Use Various Credits for the credit part of the entry.)
e. Cost of products completed, $137,500.
f. Completed products sold for $200,000, on account.
Required:
Prepare the necessary journal entries to record the above transactions.
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