Backflush versus Traditional Costing: Variations 3 and 4 Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigper approach with the purchase of materials as the first trigger point and the completion of goods as the second trigper point. During the month of June, Potter had the following transactions: Raw materials purchased $243,000 Direct labor cost 41,500 Overhead cost 207,750 260,750 Conversion cost applied $41,500 labor plus $228,250 overhead. There were no bepinning or ending inventories. All goods produced were sold with a 60 percent markup. Amy variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required 1. Prepare the journal entries for the month of May using backflush costing, assuming that Potter uses the completion of goods as the only trigger point. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order (a) completion of goods, (b) cost of sales, (c) sales revenue, and (d) recognition of the variance between applied and actual production costs 2. Prepare the journal entries for the month of May using backflush costing, assuming that Potter uses the sale of goods as the only trigger point. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order: (a) completion and sale of goods, (b) revenue from sales, and (c) recognition of the variance between applied and actual production costs. D00 000 00 00 00 000 000 00 00 Backflush versus Traditional Costing: Variations 3 and 4 Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigper approach with the purchase of materials as the first trigger point and the completion of goods as the second trigper point. During the month of June, Potter had the following transactions: Raw materials purchased $243,000 Direct labor cost 41,500 Overhead cost 207,750 260,750 Conversion cost applied $41,500 labor plus $228,250 overhead. There were no bepinning or ending inventories. All goods produced were sold with a 60 percent markup. Amy variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required 1. Prepare the journal entries for the month of May using backflush costing, assuming that Potter uses the completion of goods as the only trigger point. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order (a) completion of goods, (b) cost of sales, (c) sales revenue, and (d) recognition of the variance between applied and actual production costs 2. Prepare the journal entries for the month of May using backflush costing, assuming that Potter uses the sale of goods as the only trigger point. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order: (a) completion and sale of goods, (b) revenue from sales, and (c) recognition of the variance between applied and actual production costs. D00 000 00 00 00 000 000 00 00
