Are my journal entries correct? Please find the assignment attached. Thank you.
P3-1B Buehler Company manufactures a nutrient, Everlife, through two manufacturing processes: Blending and Packaging. All materials are entered at the beginning of each process. On August 1, 2011, inventories consisted of Raw Materials $5,000, Work in ProcessBlending $0, Work in ProcessPackaging $3,945, and Finished Goods $7,500. The beginning inventory for Packaging consisted of 500 units, two-fifths complete as to conversion costs and fully complete as to materials. During August, 9,000 units were started into production in Blending, and the following transactions were completed. 1. Purchased $25,000 of raw materials on account. 2. Issued raw materials for production: Blending $18,930 and Packaging $9,140. 3. Incurred labor costs of $23,770. 4. Used factory labor: Blending $13,320 and Packaging $10,450. 5. Incurred $41,500 of manufacturing overhead on account. 6. Applied manufacturing overhead at the rate of $25 per machine hour. Machine hours were Blending 900 and Packaging 300. 7. Transferred 8,200 units from Blending to Packaging at a cost of $44,940. 8. Transferred 8,600 units from Packaging to Finished Goods at a cost of $67,490. 9. Sold goods costing $62,000 for $90,000 on account. Instructions Journalize the August transactions. GENERAL JOURNAL P3-1B Account Titles & Explanation Debit Credit Aug-11 1 Raw Materials 25,000.00 Accounts Payable 25,000.00 2 3&4 5 6 7 WIP- Blending WIP- Packaging Raw Materials Inventory 18,930.00 9,140.00 WIP- Blending WIP- Packaging Factory Labor 13,320.00 10,450.00 Manufacturing Overhead Accounts Payable 41,500.00 WIP- Blending WIP- Packaging Manufacturing Overhead (To assign overhead to production) 22,500.00 7,500.00 WIP- Packaging WIP- Blending 44,940.00 28,070.00 23,770.00 41,500.00 30,000.00 44,940.00 8 9 Finished Goods WIP- Packaging 67,490.00 COGS Finished Goods 62,000.00 Accounts Receivable Sales 90,000.00 BYP2-2 In the course of routine checking of all journal entries prior to preparing yearend reports, Diane Riser discovered several strange entries. She recalled that the president's son Ron had come in to help out during an especially busy time and that he had recorded some journal entries. She was relieved that there were only a few of his entries, and even more relieved that he had included rather lengthy explanations. The entries Ron made were: 1. Work in Process Inventory 25,000 Cash 25,000 (This is for materials put into process. I don't find the record 67,490.00 62,000.00 90,000.00 that we paid for these, so I'm crediting Cash, because I know we'll have to pay for them sooner or later.) 2. Manufacturing Overhead 12,000 Cash 12,000 (This is for bonuses paid to salespeople. I know they're part of overhead, and I can't find an account called \"Non-factory Overhead\" or \"Other Overhead\" so I'm putting it in Manufacturing Overhead. I have the check stubs, so I know we paid these.) 3. Wages Expense 120,000 Cash 120,000 (This is for the factory workers' wages. I have a note that payroll taxes are $15,000. I still think that's part of wages expense, and that we'll have to pay it all in cash sooner or later, so I credited Cash for the wages and the taxes.) 4. Work in Process Inventory 3,000 Raw Materials Inventory 3,000 (This is for the glue used in the factory. I know we used this to make the products, even though we didn't use very much on any one of the products. I got it out of inventory, so I credited an inventory account.) Instructions (a) How should Ron have recorded each of the four events? (b) If the entry was not corrected, which financial statements (income statement or balance sheet) would be affected? What balances would be overstated or understated? BYP2-2 1 2 3 GENERAL JOURNAL Account Titles & Explanation Debit WIP Raw Materials Bonus ExpenseSales Cash Wages Expense Tax Expense Payroll Credit 25,000.00 25,000.00 12,000.00 12,000.00 105,000.00 15,000.00 120,000.00 4 WIP Manufacturing Overhead 3,000.00 3,000.00 1. The first entry would have affected the balance sheet because it was crediting cash, when Raw Materials was actually the account that should have been credited. This would cause cash to be understated on the balance sheet. 2. This entry would have affected the income statement if it had not been corrected, since all bonuses and payroll are reported on the income statement. 3. This entry would also have affected the income statement, because all payroll related entries are reflected on the balance sheet. 4. This entry would have affected the balance sheet if it were not adjusted because all inventory related items are presented on the balance sheet
