1. 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 $460,000.
   2. Placed all materials received into production.
   3. Incurred actual direct labor costs of $69,000.
   4. Incurred actual overhead costs of $479,400.
   5. Applied conversion costs of $518,200.
   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 Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Accounts Payable Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   2.	Work-in-Process Inventory Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Materials Inventory Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   3.	Work-in-Process Inventory Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Wages Payable Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   4.	Overhead Control Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Accounts Payable Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   5.	Work-in-Process Inventory Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Overhead Control Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   6.	Finished Goods Inventory Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Work-in-Process Inventory Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   7.	Cost of Goods Sold Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Finished Goods Inventory Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   8.	Cost of Goods Sold Accounts Payable Accounts Receivable Cash Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory
   	Overhead Control Accounts Payable Accounts Receivable Cost of Goods Sold Finished Goods Inventory Materials Inventory Overhead Control Wages Payable Work-in-Process Inventory

   Feedback

   Partially correct

   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.	Raw Materials and In Process Inventory Accounts Payable Conversion Cost Control Cost of Goods Sold No entry required Raw Materials and In Process Inventory
   	Accounts Payable Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   2.	No entry required Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   	No entry required Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   3 & 4.	Conversion Cost Control Accounts Payable Cash Conversion Cost Control Cost of Goods Sold No entry required
   	Wages Payable Conversion Cost Control No entry required Wages Payable
   	Accounts Payable Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   5.	No entry required Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   	No entry required Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   6.	Finished Goods Inventory Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   	Raw Materials and In Process Inventory Accounts Payable Cost of Goods Sold No entry required Raw Materials and In Process Inventory
   	Conversion Cost Control Accounts Payable Cash Conversion Cost Control Finished Goods Inventory No entry required
   7.	Cost of Goods Sold Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   	Finished Goods Inventory Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   8.	Cost of Goods Sold Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required
   	Conversion Cost Control Accounts Payable Conversion Cost Control Cost of Goods Sold Finished Goods Inventory No entry required

   Feedback

   1. See Cornerstone 11.5 for an example of traditional and backflush journal entries.

   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 Conversion Cost Control Cost of Goods Sold Raw Materials and In Process Inventory
   	Raw Materials and In Process Inventory Accounts Payable Cash Cost of Goods Sold Finished Goods Inventory Raw Materials and In Process Inventory
   	Conversion Cost Control Accounts Payable Cash Conversion Cost Control Cost of Goods Sold Finished Goods Inventory

   Feedback

   2. See Cornerstone 11.5.

   What would change for the backflush-costing journal entries?

   Entries 6 and 7 are replaced in req 1.

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

   Feedback

   Correct

   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 Cash Conversion Cost Control Finished Goods Inventory
   	Accounts Payable Accounts Payable Finished Goods Inventory Raw Materials and In Process Inventory Wages Payable
   	Conversion Cost Control Conversion Cost Control Finished Goods Inventory Raw Materials and In Process Inventory Wages Payable

   Feedback

   Partially correct

   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.

   • No entry for transaction 1, transaction 6 is replaced in req 1.
   • No entry for transaction 1, transaction 6 is replaced in req 1.
   • No entry for transaction 1 , transaction 7 is replaced in req. 1.
   with the following entry.

   Feedback

   Correct

   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 Cost of Goods Sold
   	Accounts Payable Accounts Payable Finished Goods Inventory Raw Materials and In Process Inventory Wages Payable
   	Conversion Cost Control Conversion Cost Control Finished Goods Inventory Raw Materials and In Process Inventory Wages Payable

   Feedback

   3. See Cornerstone 11.5

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

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

   Feedback

   Correct

   Feedback

   Partially correct

Loading item

There was an error loading this item. If this continues to occur, please contact Technical Support.

Check My Work

• Previous
• Next

• 100% Correct
• Partially Correct
• Incorrect
• Needs Instructor Grading

Basic Calculatorclose

0

UseEntBSBSpCEHomCEnd

789+

456-

123*

0.=/