Comprehensive Problem Major League Bat Company Major League Bat Company manufactures baseball bats. In addition to its work in process inventories, the company maintains inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process. Required: You are to maintain records and produce measures of inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory, $22,000; Work in Process Inventory, $9,690 ($2,810 of direct materials and $6,880 of conversion); Finished Goods Inventory, $140,000; Sales, $0; Cost of Goods Sold, $0; Factory Payroll Payable, $0; and Factory Overhead, $0. 1. Prepare journal entries to record the following July transactions and events. a. Purchased raw materials for $130,000 cash (the company uses a perpetual inventory system). b. Used raw materials as follows: direct materials, $52,540; and indirect materials, $11,500. c. Recorded factory payroll payable costs as follows: direct labor, $206,000; and indirect labor, $26,500. d. Paid factory payroll cost of $232,500 with cash (ignore taxes). e. Incurred additional factory overhead costs of $83,000 paid in cash. f. Allocated factory overhead to production at 50% of direct labor costs. View transaction list Journal entry worksheet 1 2 3 4 5 6 Record the purchase of raw materials for cash. Note: Enter debits before credits. Transaction General Journal Debit Credit a. 130,000 Raw materials inventory Cash Record entry Clear entry View general journal 2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted average method is used. (Round "Cost per EUP" to 2 decimal places.) 6,500 units 14,000 units 8,000 units Units Beginning inventory Started Ending inventory Beginning inventory Materials-Percent complete Conversion-Percent complete Ending inventory Materials-Percent complete Conversion-Percent complete 100% 80% 100% 30% $ Total costs to account for: Cost of beginning work in process Costs incurred this period Total costs to account for: 9,690 361,540 371,230 $ $ 0 6,500 14,000 20,500 Unit reconciliation: Units to account for: Beginning work in process inventory - units Units started this period Total units to account for Total units accounted for: Units completed and transferred out Ending work in process - units Total units accounted for Equivalent units of production (EUP)- weighted average method 12,500 8,000 20,500 12,500 100% 100% 12,500 Units completed and transferred out Ending work in process - units 12,500 8,000 100% 30% 8,000 20,500 2,400 14,900 Total units 20,500 Materials Conversion $ 2.810 $ 6,880 Cost per equivalent unit of production Cost of beginning work in process Costs incurred this period Total costs - Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals) Total costs accounted for: Costs $ 52,540 55,350 20,500 Costs EUP EUP $ 2.70 0 Cost of units transferred out: EUP Cost per EUP Total cost Direct materials 12,500 Conversion 12,500 Total costs transferred out Costs of ending goods in process EUP Total cost Cost per EUP $ 0.00 Direct materials $ 0 Conversion 0.00 0 Total cost of ending goods in process Total costs accounted for 3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following: g. Total costs transferred to finished goods for July. h. Sale of finished goods costing $273,200 for $640,000 in cash. View transaction list Journal entry worksheet Record the transfer of goods to Finished Goods Inventory. Note: Enter debits before credits. Transaction General journal Debit Credit g. Record entry Clear entry View general journal 4. Post entries from parts 1 and 3 to the following general ledger accounts. Acct. No. 133 Raw Materials Inventory Debit Acct. No. 132 Balance Date Credit Work in Process Inventory Date Debit Credit June 30 Balance 9,690 June 30 Acct. No. 212 Finished Goods Inventory Date Debit Credit June 30 Acct. No. 135 Balance 140,000 Factory Wages Payable Debit Date Credit Balance Sales Acct. No. 413 Cost of Goods Sold Debit Acct. No. 502 Balance Date Debit Credit Balance Date Credit Factory Overhead Debit Acct. No. 540 Balance Date Credit