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	$27,800
Work in ProcessMaking	10,800
Work in ProcessPacking	14,080
Materials	6,100

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		$346,230
b.	Materials requisitioned for use
		PhosphateMaking Department	$228,710
		PackagingPacking Department	79,550
		Indirect materialsMaking Department	8,950
		Indirect materialsPacking Department	3,210
c.	Labor used
		Direct laborMaking Department	$163,400
		Direct laborPacking Department	110,290
		Indirect laborMaking Department	31,640
		Indirect laborPacking Department	56,730
d.	Depreciation charged on fixed assets
		Making Department	$29,830
		Packing Department	24,630
e.	Expired prepaid factory insurance
		Making Department	$5,650
		Packing Department	2,260
f.	Applied factory overhead
		Making Department	$77,970
		Packing Department	86,150
g.	Production costs transferred from Making Department to Packing Department		$471,440
h.	Production costs transferred from Packing Department to Finished Goods		$741,960
i.	Cost of goods sold during the period		$744,670

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Item	Account	Debit	Credit
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	$	Debit

Feedback

1. Remember that there are three different types of inventory; materials, work in process, and finished goods. Each department has a work in process account to track the costs that were accumulated in that department.

2 and 3. Set up T accounts to help determine the balances from the transactions above.