Kwanika Co. operates in a lean manufacturing environment. During its first year of operations, Kwanika budgeted for 40,000 hours in the production of 100,000 units in its Cell X-22. Materials costs were $7.00 per unit. Cell X-22 conversion costs were budgeted for the year as follows:

Direct and indirect labor	$ 900,000
Machine depreciation	125,000
Maintenance and supplies	375,000
Utilities	225,000
Total	$1,625,000

During January, materials for 8,400 units were purchased on account. There were 8,200 units manufactured and 8,000 were sold and shipped to customers for $35 each. Conversion costs are applied based on units of production.

Required:

Journalize: (a) the material purchases; (b) the application of conversion costs; (c) the transfer from work in process to finished goods; and (d) the sales (were made on account) and associated cost of goods sold for the month of January. Round cost per unit answer to the nearest cent. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for spaces or journal explanations. Every line on a journal page is used for debit or credit entries. Do not add explanations or skip a line between journal entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.

CHART OF ACCOUNTS

Kwanika Co.

General Ledger

	ASSETS
110	Cash
121	Accounts Receivable
125	Notes Receivable
126	Interest Receivable
133	Raw and In Process Inventory
136	Conversion Costs
138	Finished Goods Inventory
141	Supplies
142	Prepaid Insurance
181	Land
190	Equipment
191	Accumulated Depreciation

	LIABILITIES
210	Accounts Payable
221	Utilities Payable
231	Notes Payable
236	Interest Payable
251	Wages Payable

	EQUITY
311	Common Stock
340	Retained Earnings
351	Dividends
390	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
530	Wages Expense
532	Insurance Expense
533	Utilities Expense
534	Office Supplies Expense
560	Depreciation Expense
562	Depreciation Expense-Factory
590	Miscellaneous Expense
710	Interest Expense

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JOURNAL

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