Tambin Inc. produces a gasoline additive that, when added to the gas tank of the average automobile, is designed to increase gas mileage by 10%. The company's controller suspects that the year-end dollar balances shown below in the inventory accounts may be incorrect.

There were no finished goods inventories at the beginning of the year. The company uses the weighted average method of process costing. There is only one processing department. A review of the company's inventory and cost records shows the following:

Required

1. Determine the equivalent units and the costs per equivalent unit for materials and conversion for the year.

2. Determine the amount of cost that should be assigned to the ending work in process and finished goods inventories.

3. Prepare the necessary correcting journal entry to adjust the work in process and finished goods inventories to the correct balances as of December 31.

Transcribed Image Text:

Costs Units Materials Conversion Work in process, beginning of year (materials 100% complete; conversion 80% complete) .. Started into production . . . 20,000 $ 22,000 $ 48,000 600,000 Costs added during the year Units completed during the year. $750,000 $2,000,000 680,000