Lochner Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses the completion of goods as the trig¬

ger point to flush the manufacturing costs out of the system. During the month of October, Lochner had the following transactions:

There were no beginning or ending inventories. All goods produced were sold with a 40%
markup. Any variance is closed to Cost of Goods Sold.
Required:
1. Prepare the journal entries that would have been made using a traditional accounting approach for cost flows.
2. Prepare the journal entries for the month using backflush costing.
3. Prepare the journal entries for the month using backflush costing, assuming that Lochner uses the sale of goods as the second trigger point instead of the completion of goods.

Transcribed Image Text:

Raw materials purchased $120,000 Direct labor cost 20,000 Overhead cost 100,000 Conversion cost applied 130,000* *$20,000 labor plus $110,000 overhead