Cost of Production and Journal Entries

Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March.

Account Work in ProcessPapermaking Department							Account No.
Date		Item	Debit		Credit		Balance
							Debit		Credit
Mar.	1	Bal., 7,200 units, 30% completed					13,104
	31	Direct materials, 38,400 units	49,920				63,024
	31	Direct labor	16,060				79,084
	31	Factory overhead	9,032				88,116
	31	Goods transferred, 42,900 units			?		?
	31	Bal., 2,700 units, 40% completed					?

a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production.

	Work in Process-Papermaking Department
	Materials-Pulp

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a1. Remember there are three different types of inventory; materials, work in process, and finished goods.

a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.

	Work in Process-Papermaking Department
	Wages Payable
	Factory Overhead-Papermaking Department

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a2. What types of costs are included in conversion costs? By adding these conversion costs are the units complete and ready for transfer?

a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.

	Work in Process-Converting Department
	Work in Process-Papermaking Department

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a3. Remember that each department has a work in process account. Are these units 100% complete and ready to be sold or are they still in process?

b. Determine the Work in ProcessPapermaking Department March 31 balance. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar. $