GL2001 - Based on Problem 20-1A Sierra Company LO P1, P2, P3, P4

Sierra Company manufactures woven blankets and accounts for product costs using process costing. The company uses a single processing department. The following information is available regarding its May inventories.

	Beginning Inventory			Ending Inventory
Raw materials inventory	$	60,000		$	92,500
Work in process inventory		435,000			515,000
Finished goods inventory		633,000			605,000

The following additional information describes the company's production activities for May.

Raw materials purchases (on credit)	$	250,000
Factory wages cost (paid in cash)		1,530,000
Other overhead cost (Other Accounts credited)		87,000
Materials used
Direct	$	157,500
Indirect		60,000
Labor used
Direct	$	780,000
Indirect		750,000
Overhead rate as a percent of direct labor		115	%
Sales (on credit)	$	2,500,000

Part 1. Prepare a General Journal

a. Record the purchase of materials (on credit).

b. Record direct materials used in production.

c. Record the usage of indirect materials.

d. Record the cost of direct labor incurred but not yet paid. (Use "Factory payroll payable" account).

e. Record the cost of indirect labor incurred but not yet paid. (Use "Factory payroll payable" account).

f. Record the payment of the total factory payroll.

g. Record the cost of other factory overhead costs (credit Other accounts).

h. Record the application of overhead at a rate of 115% of direct labor.

i. Record the transfer of production to finished goods, as calculated on the Cost of Goods Manufactured tab.

j. Record the sale of goods on account.

j2. Record the cost of goods sold, as calculated on the cost of goods sold tab.

Part 2. General Ledger

Dates: _____ to ______

Part 3. Verify the ending balance in raw materials inventory. Enter the amount of materials used as negative values.

Part 4. Prepare a schedule of cost of goods manufactured for Sierra Company for the month of May.

Part 5. Calculate the value of cost of goods sold for the month of May.

Dates: ____ to ____

Part 6. Calculate the value of gross profit for the month of May.

General Ledger Account Cash Accounts receivable Debit No Date Credit Balance Date Debit Credit Balance 80,000 2,050,000 Apr 30 Apr 30 Raw materials inventory Work in process inventory Debit No Date Credit Balance No Date Debit Credit Balance 60,000 435,000 Apr 30 Apr 30 Finished goods inventory Factory Equipment No Date Debit Credit Balance No Date Debit Credit Balance Apr 30 633,000 Apr 30 250,000 Accumulated depreciation-Factory equipment Accounts payable Debit Balance Balance No Date Credit Date Debit Credit Apr 30 50,000 665,000 Apr 30 Common stock, $5 par value Paid-in capital in excess of par - Common Credit Date Debit Credit Balance Date Debit Balance Apr 30 250,000 240,000 Apr 30 Retained earnings Debit Date Credit Balance 2,303,000 Apr 30 Beginning Raw Materials Inventory Materials available for use Ending raw material inventory Total manufacturing costs added during May Total cost of work in process Calculate cost of goods sold: 1,754,500 Cost of goods available for sale (605,000) $ 1,782,500 Cost of goods sold Gross Profit