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:

Purchased raw materials on account for $370,000. Placed all materials received into production. Incurred actual direct labor costs of $55,500. Incurred actual overhead costs of $385,800. Applied conversion costs of $417,400. Completed all work for the month. Sold all completed work. Computed the difference between actual and applied costs.

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.

3 & 4. Cost of Goods Sold Wages Payable Finished Goods Inventory 5. Cost of Goods Sold Finished Goods Inventory 6. Cost of Goods Sold Finished Goods Inventory

Part B. 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.

Conversion Cost Control Cash Conversion Cost Control

What would change for the backflush-costing journal entries?

No entry for transaction 1, transaction 6 is replaced in req 1. with the following entry.

Part C 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.

Accounts Payable Finished Goods Inventory Wages Payable

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

No entry for transaction 1, transaction 6 is replaced in req 1.No entry for transaction 1, transaction 6 is replaced in req 1. 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.

Accounts Payable Wages Payable Wages Payable

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