Lubricants, Inc., produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments:

The following incomplete Work in Process account is available for the Refining Department for March:

Work in ProcessRefining Department

March 1 balance	32,200	Completed and transferred to Blending	?
Materials	139,600
Direct labor	66,200
Overhead	475,000
March 31 balance	?

The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,400; direct labor, $3,800; and overhead, $20,000.

Costs incurred during March in the Blending Department were: materials used, $45,000; direct labor, $17,600; and overhead cost applied to production, $99,000.

Required:

1.	Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

a.	Raw materials were issued for use in production.
b.	Direct labor costs were incurred.
c.	Manufacturing overhead costs for the entire factory were incurred, $686,000. (Credit Accounts Payable.)
d.	Manufacturing overhead cost was applied to production using a predetermined overhead rate.
e.	Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $652,000.
f.	Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $740,000.
g.	Completed units were sold on account, $1,370,000. The Cost of Goods Sold was $610,000.

Journal Entry Worksheet

• Record issuance of raw materials to Refining and Blending Department.
• Record direct labor cost incurred for Refining and Blending Department.
• Record manufacturing expenses incurred for the whole factory.
• Record entry to apply overhead cost to production at a predetermined rate to Refining Department.
• Record entry to apply overhead cost to production at a predetermined rate to Blending Department.
• Record transfer of semi finished units from Refining to Blending Department.
• Record transfer of finished goods to inventory.
• Record sales on account.
• Record cost of goods sold.

Transactions

General Journal

Debit

Credit

a.	Work in processBlending Department
Work in processRefining Department
Raw materials	210,600

*Enter debits before credits

transaction list

• 1. Record issuance of raw materials to Refining and Blending Department.
• 2. Record direct labor cost incurred for Refining and Blending Department.
• 3. Record manufacturing expenses incurred for the whole factory.
• 4. Record entry to apply overhead cost to production at a predetermined rate to Refining Department.
• 5. Record entry to apply overhead cost to production at a predetermined rate to Blending Department.
• 6. Record transfer of semi finished units from Refining to Blending Department.
• 7. Record transfer of finished goods to inventory.
• 8. Record sales on account.
• 9. Record cost of goods sold.
• =journalentryhasbeenentered

2.	Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Departments Work in Process account is given on the prior page.)

Raw materials	$	210,600
Work in processBlending Department	$	54,000
Finished goods	$	25,000

After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead account.

Accounts Receivable	Raw Materials
Beg. Bal.	Beg. Bal.
End. Bal.	0	End. Bal.	0
Work in ProcessRefining Department	Work in ProcessBlending Department
Beg. Bal.	Beg. Bal.
End. Bal.	0	End. Bal.	0
Finished Goods	Manufacturing Overhead
Beg. Bal.	Beg. Bal.
End. Bal.	0	0	End. Bal.	0
Accounts Payable	Salaries and Wages Payable
Beg. Bal.	Beg. Bal.
End. Bal.	0	End. Bal.	0
Sales	Cost of Goods Sold
Beg. Bal.	Beg. Bal.
End. Bal.	0	End. Bal.	0