Assume that the second trigger point for Grand Meter Corporation is the sale—rather than the completion—of finished goods. Also, the inventory account is confined solely to direct materials, whether these materials are in a storeroom, in work in process, or in finished goods. No conversion costs are inventoried. They are allocated to the units sold at standard costs. Any under-or overallocated conversion costs are written off monthly to Cost of Goods Sold.

In Problem 20-31, The Grand Meter Corporation manufactures electrical meters. For August, there were no beginning inventories of direct materials and no beginning or ending work in process. Grand Meter uses a JIT production system and backflush costing with three trigger points for making entries in the accounting system:

Purchase of direct materials and incurring of conversion costs

Completion of good finished units of product

Sale of finished goods

Grand Meter’s August standard cost per meter is direct materials, $ 25, and conversion cost $ 20. Grand Meter has no direct materials variances. The following data apply to August manufacturing:

Direct materials purchased ..........$ 550,000

Number of finished units manufactured .... 21,000

Conversion costs incurred ..........$ 440,000

Number of finished units sold ......... 20,000

Required

1. Prepare summary journal entries for August, including the disposition of under-or overallocated conversion costs. Assume no direct materials variances.

2. Post the entries in requirement 1 to T-accounts for Inventory Control, Conversion Costs Control, Conversion Costs Allocated, and Cost of Goods Sold.