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 $700,000. 2. Placed all materials received into production. 3. Incurred actual direct labor costs of $105,000. 4. Incurred actual overhead costs of $729,000. 5. Applied conversion costs of $787,000. 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 1 1 1 1 1 1 1 I II III Accounts Payable 5. Work-in-Process Inventory Overhead Control 6. Finished Goods Inventory Work-in-Process 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 "O". For a compound transaction, if an amount box does not require an entry, leave it blank. 1. Raw Materials and In Process Inventory Accounts Payable 2. 3 & 4. Conversion Cost Control Wages Payable Accounts Payable 5. I III III I II HII III I 6. Finished Goods Inventory Raw Materials and In Process Inventory Conversion Cost Control 7. Cost of Goods Sold Finished Goods Inventory 8. Cost of Goods Sold Conversion Cost Control 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. Cost of Goods Sold Raw Materials and In Process Inventory Conversion Cost Control What would change for the backflush-costing journal entries? Entries 6 and 7 are replaced in reg 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. Finished Goods Inventory Accounts Payable Conversion Cost Control 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. 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. Cost of Goods Sold Accounts Payable Conversion Cost Control No entry for transaction 1, transaction 6 and 7 are replaced in req 1. with the following entry