Backflush Costing

Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year:

1. Purchased raw materials on account for $430,000.
2. Placed all materials received into production.
3. Incurred actual direct labor costs of $64,500.
4. Incurred actual overhead costs of $448,200.
5. Applied conversion costs of $484,600.
6. Completed all work for the month.
7. Sold all completed work.
8. Computed the difference between actual and applied costs.

Required:

1. Prepare the journal entries for traditional costing.

1.	Materials Inventory
	Accounts Payable
2.	Work-in-Process Inventory
	Materials Inventory
3.	Work-in-Process Inventory
	Wages Payable
4.	Overhead Control
	Accounts Payable
5.	Work-in-Process Inventory
	Overhead Control
6.	Cost of Goods Sold
	Finished Goods Inventory
7.	Cost of Goods Sold
	Finished Goods Inventory
8.	Cost of Goods Sold
	Overhead Control

Prepare the journal entries for backflush costing. Assume there are two trigger points: (1) the purchase of raw materials and (2) the completion of the goods. If no entry is required, select "No entry required" and leave the amount boxes blank or enter "0". For a compound transaction, if an amount box does not require an entry, leave it blank.

1.
2.
3 & 4.
5.
6.
7.
8.

2. Assume the second trigger point in Requirement 1 is the sale of goods. If an amount box does not require an entry, leave it blank.

	Raw Materials and In Process Inventory

What would change for the backflush-costing journal entries?

Entries 6 and 7 are replaced in req 1. with the following entry.

3. Assume there is only one trigger point and it is (a) completion of the goods or (b) sale of goods. If an amount box does not require an entry, leave it blank.

How would the backflush costing journal entries differ from Requirement 1 for (a)?

with the following entry.

How would the backflush costing journal entries differ from Requirement 1 for (b)? If an amount box does not require an entry, leave it blank.

No entry for transaction 1, transaction 6 and 7 are replaced in req 1. with the following entry.