Backflush Costing: Variation 2

Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions:

Raw materials purchased	$245,000
Direct labor cost	41,000
Overhead cost	205,000
Conversion cost applied	266,500*

^*$41,000 labor plus $225,500 overhead.

There were no beginning or ending inventories. All goods produced were sold with a 50 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.)

Required:

Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order: (a) purchase of raw materials, (b) incurrence of direct labor and overhead costs, (c) cost of sales, (d) sales revenue, and (e) recognition of the variance between applied and actual production costs.

a.	Raw Materials and In Process Inventory	fill in the blank 2
	Accounts Payable		fill in the blank 4
b.	Conversion Cost Control	fill in the blank 6	fill in the blank 7
	Accounts Payable	fill in the blank 9	fill in the blank 10
	Wages Payable	fill in the blank 12	fill in the blank 13
c.	Cost of Goods Sold	fill in the blank 15	fill in the blank 16
	Raw Materials and In Process Inventory	fill in the blank 18	fill in the blank 19
	Conversion Cost Control	fill in the blank 21	fill in the blank 22
d.	Accounts Receivable	fill in the blank 24
	Sales Revenue		fill in the blank 26
e.	Conversion Cost Control	fill in the blank 28
	Cost of Goods Sold		fill in the blank 30