Question

Problem 03-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 (The following information applies to the questions displayed below.) Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the Cutting process. The following information is available regarding its May inventories: Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory Beginning Ending Inventory Inventory 213,500 145,500 233,300 113,200 54,100 42,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching $ 110,000 26,000 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 24,100 96,400 178,900 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs $ 64,800 58,400 64,000 Factory Overhead Rates Cutting (150% of direct materials used) Stitching (120% of direct labor used) Sales $936,000

Answer 1

Work in process (WIP)-Cutting
WIP-April 30	213,500	C of GM-Cutting	157,100
Direct materials-cutting	26,000
DL-Cutting	24,100
OH-cutting	39000
WIP-May 31	145,500

Work in process (WIP)-Stitching
WIP-April 30	233,300	Cof GM-Stitching	489,280
Cof GM-cutting	157,100
DL-stitching	96,400
OH-Stitching	115680
WIP-May 31	113,200

Finished goods
FG-April 30	54,100	COGS	501,130
C of GM-Stitching	489,280
FG-May 31	42,250
production costs transferred from cutting to stitching					157,100
cost of goods tranferred to finished goods				489,280
cost of goods sold				501,130

	Journal Entries
No	Date	General Journal				Debit	Credit
1	31-May	Raw materials inventory				110,000
		Accounts payable					110,000
2	31-May	Work in process inventory-Cutting				26,000
		Raw materials inventory					26,000
3	31-May	Factory overhead				64,800
		Raw materials inventory					64,800
4	31-May	Work in process inventory-Cutting				24,100
		Work in process inventory-Stitching				96,400
		Factory wages payable					120,500
5	31-May	Factory overhead				58,400
		Factory wages payable					58,400
6	31-May	Factory wages payab;e				178,900
		cash					178,900
7	31-May	Factory overhead				64,000
		other accounts					64,000
8	31-May	Work in process inventory-Cutting				39000
		Work in process inventory-Stitching				115680
		Factory wages payable					154680
9	31-May	Work in process inventory-Stitching				157,100
		Work in process inventory-Cutting					157,100
10	31-May	finished goods inventory				489,280
		Work in process inventory-Stitching					489,280
11	31-May	cost of good sold				501,130
		Finished goods inventory					501,130
12	31-May	Accounts receivable				936,000
		Sales					936,000