Question

Lubricants, Inc. produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments-Refining and Blending. Raw materiels are introduced at various points in the Refining Department The following incomplete Work in Process account is available for the Refining Department for March: Work in Process-Refining Department March 1 balance 38, 00Conpleted and transferred to Blending Materials Direct labor Overhead March 31 balance 495, 008 72, BEE 181,068 The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $25,000; direct labor, $4,000; and overhcad, $9,000. Costs incurred during March in the Blending Department were: materials used, $115,000: direct labor, $18,000: and overhead cost applied to production, $42,00O. Required: 1. Prepare journal entries 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 materials used in production. b. Direct labor costs incurred. C. Manufacturing overhead costs incurred for the entire factory, $225,000. (Credit Accounts Payable.) dl. Manufacturing overhead was applied to production using a p e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department overhead rate. $740,000. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $950,000. g. Completed units were sold on account, $1,500,000. The Cost of Goods Sold was $900,000. 2. Post the journal entries from (1) 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 given in the T-account shown above.) Raw materials Work in process-Blending Department Fin1shed goods 5 618, e0e $ 65,000 $ 20,000 Complete this question by entering your answers in the tabs below.

Answer 1

Journal entries:
S.no.	Accounts title and explanations				Debit $	Credit $
a.	Work in process- Refining				495000
	Work in process-Blending				115000
	Raw material inventory					610000
b.	Work in process- Refining				72000
	Work in process-Blending				18000
	Wages payable					90000
c.	Manufacturing overheads				225000
	Accounts payable					225000
d.	Work in process- Refining				181000
	Work in process-Blending				42000
	Mannufacturing overheads					223000
e.	Work in process-Blending				740000
	Work in process-Refining					740000
f.	Finished Goods inventory				950000
	Work in process-Blending					950000
g.	Cost of goods sold				900000
	Finished Goods inventory					900000
	Accounts receivable				1500000
	Sales revenue					1500000
Req 2.
RAW MATERIAL INVENTORY
Balance		618,000	Work in process-Ref.		495,000
			Work in process-blending		115,000
Ending Balance		8,000
MANUFACTURING OVERHEADS
Accounts Payable		225,000	Work in process-Ref.		181,000
			Work in process-blending		42,000
Ending balance		2,000
WORK IN PROCESS INVENTORY-Refining
Balance		38,000	Work in process-Blending		740,000
Raw material Inv.		495,000
Wages Payable		72,000
Manufacturing Overheads		181,000
Balance		46,000
WORK IN PROCESS INVENTORY-Blending
Balance		65,000	Finished Goods Inventory		950,000
Work in process-Refining		740,000
Raw material Inv.		115,000
Wages Payable		18,000
Manufacturing Overheads		42,000
Balance		30,000
FINISHED GOODS INVENTORY
Balance		20,000	Cost of Goods sold		900,000
WIP-Blending		950,000
Balance		70,000
Cost of goods sold
Finished Goods inventory		900,000
Balance		900,000