Question

Entries for Process Cost System

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	$15,870
Work in Process—Making	6,170
Work in Process—Packing	8,040
Materials	3,480

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.	Materials purchased on account		$197,630
b.	Materials requisitioned for use
		Phosphate—Making Department	$130,550
		Packaging—Packing Department	45,410
		Indirect materials—Making Department	5,110
		Indirect materials—Packing Department	1,830
c.	Labor used
		Direct labor—Making Department	$93,270
		Direct labor—Packing Department	62,950
		Indirect labor—Making Department	18,060
		Indirect labor—Packing Department	32,380
d.	Depreciation charged on fixed assets
		Making Department	$17,030
		Packing Department	14,060
e.	Expired prepaid factory insurance
		Making Department	$3,230
		Packing Department	1,290
f.	Applied factory overhead
		Making Department	$44,510
		Packing Department	49,170
g.	Production costs transferred from Making Department to Packing Department		$269,090
h.	Production costs transferred from Packing Department to Finished Goods		$423,510
i.	Cost of goods sold during the period		$425,060

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Item	Account	Debit	Credit
a.	Materials
	Accounts Payable
b.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Materials
c.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Wages Payable
d.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Accumulated Depreciation
e.	Factory Overhead-Making Department
	Factory Overhead-Packing Department
	Prepaid Insurance
f.	Work in Process-Making Department
	Work in Process-Packing Department
	Factory Overhead-Making Department
	Factory Overhead-Packing Department
g.	Work in Process-Packing Department
	Work in Process-Making Department
h.	Finished Goods
	Work in Process-Packing Department
i.	Cost of Goods Sold
	Finished Goods

2. Compute the July 31 balances of the inventory accounts.

Materials	$
Work in Process—Making Department	$
Work in Process—Packing Department	$
Finished Goods	$

3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$	Credit
Factory Overhead—Packing Department	$	Debit

Answer 1

Item	Account				Debit	Credit
a.	Materials				197,630
	Accounts payable					197,630
b.	work in process-Making Deptt				130,500
	work in process-pcking Deptt				45,410
	Factory overhead -making Deptt				5,110
	Factory overhead -packing Deptt				1,830
	Materials					182,850
c.	work in process-Making Deptt				93,270
	work in process-pcking Deptt				62,950
	Factory overhead -making Deptt				18,060
	Factory overhead -packing Deptt				32,380
	Wages payable					206,660
d.	Factory overhead -making Deptt				17,030
	Factory overhead -packing Deptt				14,060
	Accumulated Depreciation					31,090
e	Factory overhead -making Deptt				3,230
	Factory overhead -packing Deptt				1,290
	prepaid insurance					4,520
f.	work in process-Making Deptt				44,510
	work in process-pcking Deptt				49,170
	Factory overhead -making Deptt					44,510
	Factory overhead -packing Deptt					49,170
g.	work in process-packing department				269,090
	work in process-making department					269,090
h.	finished goods				423,510
	work in process-packing department					423,510
i.	cost of goods sold				425,060
	finished goods					425,060
2)
	materials				18,260
	work in process -Making Department				5,360
	work in process-Packing Department				11,150
	finished goods				14,320
	t-Accounts
	materials
	opening	3,480	Requistioned		182,850
	purchases	197,630
	end bal	18,260
	work in process-making deptt
	opening	6,170
	DM	130,500	trfg -packing deptt		269,090
	DL	93,270
	OH applied	44,510
	end bal	5,360
	work in process-pcking deptt
	opening	8,040
	trfd making	269,090
	DM	45,410	finished goods		423,510
	DL	62,950
	OH applied	49,170
	end bal	11,150
	finished goods
	opening	15,870	cost of goods sold		425,060
	WIP-packing	423,510
	end bal	14,320
3)
	Factory overhea-making department				1,080	Credit
	Factory overhead -packing department				390	Debit
	Factory overhead-making department
	indirect mt	5,110	WIP		44,510
	ind lab	18,060
	dep	17,030
	prepaid	3,230
			end bal		1,080
	Factory overhead-packing department
	indirect mt	1,830	WIP		49,170
	ind lab	32,380
	dep	14,060
	prepaid	1,290
	end bal	390