Question

Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process. Required: You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $37,000; Work in Process Inventory, $12,035 ($3,560 of direct materials and $8,475 of conversion); Finished Goods Inventory, $180,000; Sales, $0; Cost of Goods Sold, $0; Factory Wages Payable, $0; and Factory Overhead, $0. 1. Prepare journal entries to record the following July transactions and events. a. Purchased raw materials for $205,000 cash (the company uses a perpetual inventory system). b. Used raw materials as follows: direct materials, $58,540; and indirect materials, $19,000. c. Recorded factory wages payable costs as follows: direct labor, $224,750; and indirect labor, $34,000. d. Paid factory payroll cost of $258,750 with cash (ignore taxes). e. Incurred additional factory overhead costs of $98,000 paid in cash. f. Applied factory overhead to production at 50% of direct labor costs. 2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted average method is used. (Round "Cost per EUP" to 2 decimal places.)

Answer 1

Q. No.	Particulars	Debit	Credit
		Amount ($)	Amount ($)
1. a)	Raw Materials	205000
	To Cash		205000
	(Being purchase of Raw materials recorded)
b)	WIP inventory	58540
	To Raw materials		58540
	(Being Direct materials issued in production)
	Manufacturing overhead	19000
	To Raw materials		19000
	(Being Indirect materials transferred to manufacturing overhead which shall be then allocated to WIP)
c)	WIP inventory	224750
	To Factory wages payable		224750
	(Being Direct labour costs assigned to production)
	Manufacturing overhead	34000
	To Factory wages payable		34000
	(Being Direct labour costs assigned to production)
	WIP inventory	53000
	To Manufacturing overhead		53000
	(Being overhead costs assigned to productswhen moved to production)
d)	Factory Payroll costs / Wages / Salaries	258750
	To Cash		258750
	(Being factory payroll costs paid in cash)