Entries for Process Cost System

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods$11,070

Work in ProcessMaking4,300

Work in ProcessPacking5,610

Materials2,430

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.Materials purchased on account$137,880

b.Materials requisitioned for use:

PhosphateMaking Department$91,080

PackagingPacking Department31,680

Indirect materialsMaking Department3,560

Indirect materialsPacking Department1,280

c.Labor used:

Direct laborMaking Department$65,070

Direct laborPacking Department43,920

Indirect laborMaking Department12,600

Indirect laborPacking Department22,590

d.Depreciation charged on fixed assets:

Making Department$11,880

Packing Department9,810

e.Expired prepaid factory insurance:

Making Department$2,250

Packing Department900

f.Applied factory overhead:

Making Department$31,050

Packing Department34,310

g.Production costs transferred from Making Department to Packing Department$187,740

h.Production costs transferred from Packing Department to Finished Goods$295,470

i.Cost of goods sold during the period$296,550

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. If an amount box does not require an entry, leave it blank.

ItemAccountDebitCredit

a.Materials

Accounts Payable

b.Work in Process-Making Department

Work in Process-Packing Department

Factory Overhead-Making Department

Factory Overhead-Packing Department

Materials

c.Work in Process-Making Department

Work in Process-Packing Department

Factory Overhead-Making Department

Factory Overhead-Packing Department

Wages Payable

d.Factory Overhead-Making Department

Factory Overhead-Packing Department

Accumulated Depreciation

e.Factory Overhead-Making Department

Factory Overhead-Packing Department

Prepaid Insurance

f.Work in Process-Making Department

Work in Process-Packing Department

Factory Overhead-Making Department

Factory Overhead-Packing Department

g.Work in Process-Packing Department

Work in Process-Making Department

h.Finished Goods

Work in Process-Packing Department

i.Cost of Goods Sold

Finished Goods

2. Compute the July 31 balances of the inventory accounts.

Materials$

Work in ProcessMaking Department$

Work in ProcessPacking Department$

Finished Goods$

3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.

Factory OverheadMaking Department$Credit

Factory OverheadPacking Department$