Lexington Company produces baseball bats and cricket paddles. It has two departments that process all products. During July, the beginning work in process in the cutting department was half completed as to conversion, and complete as to direct materials. The beginning inventory included $40,000 for materials and $60,000 forconversion costs. Ending work-in-process inventory in the cutting department was 40% complete. Direct materials are added at the beginning of the process.

Beginning work in process in the finishing department was 80% complete as to conversion. Transferred-in is added at the beginning. Direct materials for finishing the units are added near the end of the process. Beginning inventories included $24,000 for transferred-in costs and $28,000 for conversion costs. Ending inventory was 30% complete. Additional information about the two departments follows:

	Cutting	Finishing
Beginning work-in-process units	20,00	24,000
Units started this period	60,000
Units transferred this period	64,00	68,000
Ending work-in-process units		20,000
Material costs added	$48,000	$34,000
Conversion costs	28,000	68,500
Transferred-Out Costs	128,000

1.) Prepare a production cost workseet, using FIFO for the finishing department up to cost per equivalent units.

Flow of Production	Physical Units	Direct Materials	Conversion	Transferred-In

Costs	Totals	Direct Materials	Conversion	Transferred-In
WIP, beginning
Costs added during period
Total costs to account for
Equivalent-Unit Costs

2.) Prepare the computation to assign cost to transferred-out and the respective journal entry.