Backflush Costing. The La Jolla Manufacturing Company has a mature JIT production system with average cycle time of less than one clay. Total time from receipt of raw material to completion of finished product is less than three days. La Jolla uses a finished goods account and a combined raw and in process (RIP) inven¬ tory account; there is a separate account, entitled Supplies, for indirect factory materials. La Jolla expenses all conversion costs to the cost of goods sold account. At the end of each month, all inventories are counted, their conversion cost components are estimated, and inventory account balances are adjusted accordingly. Raw material cost is backflushed from RIP to Finished Goods and from Finished Goods to Cost of Goods Sold. The following information is a summary of selected transactions and other information for the month of May: Beginning balances in inventory accounts: LO7 Raw and InProcess. $ 31,300 FinishedGoods. 280,000 Supplies.. 27,000 The May 1 RIP balance consisted of a $30,000 cost of materials, most of which were not yet in process, plus a $1,300 conversion cost estimate assigned to partially processed work. The Finished Goods balance con¬ sisted of $150,000 material cost and a $130,000 estimate of conversion cost.

May 31 inventories based on physical count:

Raw and InProcess. $ 37,100 FinishedGoods. 294,000 Supplies. 17,000 The May 31 RIP amount consisted of a $35,000 cost of materials, most of which were not yet in process, plus a $2,100 conversion cost estimate assigned to partially processed work. The Finished Goods amount con¬ sisted of $160,000 material cost and a $134,000 estimate of conversion cost.

(a) Direct materials received on credit cost $620,000.

(b) Indirect materials used cost $10,000.

(c) Gross payroll of $300,000 was recorded; the payroll was paid.

(d) The payroll distribution was:

Direct labor.

Indirect factory labor...

Marketing salaries.

Administrative salaries

$50,000 90,000 90,000 70,000

(e) Factory overhead costs:

Depreciation. $514,000 Insurance. 9,000

(f) Miscellaneous factory overhead costs:

Paid incash. $26,000 Onaccount. 7,000

(g) The factory overhead accumulated in the factory overhead control account was expensed to Cost of Goods Sold.

(h) The material cost component of completed work is backflushed from RIP.

(i) The material cost component of work sold is backflushed from Finished Goods.

(j) Ending balances are established in inventory accounts by adjusting their conversion cost components.

Required:

(1) Prepare journal entries based on the preceding information.

(2) Prepare completed T accounts for RIP, Finished Goods, and Cost of Goods Sold.