7-23

Sunset Products manufactures skateboards. The following transactions occurred in March.

1. Purchased $22,000 of materials on account.

2. Issued $1,200 of supplies from the materials inventory.

3. Purchased $25,400 of materials on account.

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $30,400 in direct materials to the production department.

6. Incurred direct labor costs of $27,000, which were credited to Wages Payable.

7. Paid $21,900 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing shop.

8. Applied overhead on the basis of 125 percent of direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $5,400.

The following balances appeared in the accounts of Sunset Products for March.

	Beginning			Ending
Materials Inventory	$	9,600			?
Work-in-Process Inventory		16,900			?
Finished Goods Inventory		65,400		$	36,900
Cost of Goods Sold					73,400

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.