Major League Bat Company manufactures baseball bats. In addition to its work in process Inventories, the company maintains Inventories of raw materials and finished goods. It uses raw materials as direct materials in production and as indirect materials. Its factory payroll costs include direct labor for production and Indirect labor. All materials are added at the beginning of the process, and conversion costs are applied uniformly throughout the production process. Required: You are to maintain records and produce measures of Inventories to reflect the July events of this company. The June 30 balances: Raw Materials Inventory. $25,000; Work In Process Inventory, $8,385 ($2,960 of direct materials and $5,425 of conversion); Finished Goods Inventory. $170,000; Sales, $0; Cost of Goods Sold, $0; Factory Payroll Payable, $0; and Factory Overhead. $0. 1. Prepare journal entries to record the following July transactions and events. a. Purchased raw materials for $145,000 cash. b. Used raw materials as follows: direct materials, $72,040; and Indirect materials, $13,000. c. Recorded factory wages payable costs as follows: direct labor, $209,750; and Indirect labor, $28,000. d. Incurred other actual factory overhead costs of $63,875 paid in cash. e. Applied factory overhead to production at 50% of direct labor costs. 2. Information about the July work in process (WIP) Inventory follows. Use this information with that from part 1 to prepare a production cost report, assuming the weighted average method is used. Units Beginning WIP inventory Started Units transferred out Ending WIP inventory 8,000 units 17,000 units 14,000 units 11,000 units Beginning WIP Inventory Direct materials-Percent complete Conversion-Percent complete Ending WIP Inventory Direct materials-Percent complete Conversion-Percent complete 100% 80% 100% 30% 3. Using the results from part 2 and the available Information, make computations and prepare journal entries to record the following: f. Total costs transferred to finished goods for July. g. Sale of finished goods costing $280,700 for $655,000 in cash. 4. Post entries from parts 1 and 3 to the following general ledger accounts. 5. Compute the amount of gross profit from the sales in July. 1 Record the purchase of raw materials for cash. Record the use of direct materials. 3 Record the use of indirect materials. Record the direct labor cost incurred, but not yet paid. 5 Record the indirect labor cost incurred, but not yet paid. Record other overhead paid in cash. Record overhead applied at 50% of direct labor. Note: journal entry has been entered Record entry x Credit Clear entry View general journal Unit reconciliation: Units to account for: Total units to account for Units accounted for: Total units accounted for Equivalent units of production (EUP) Equivalent Units of Production Cost per equivalent unit of production Total costs - Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals) Cost Assignment Completed and transferred out Direct materials Conversion Ending work in process Direct materials Conversion Total costs accounted for Direct Materials Units % Complete Conversion EUP % Complete EUP Direct Materials Costs EUP EUP Cost per EUP Total cost EUP Cost per EUP Total cost Costs EUP Conversion Record the transfer of goods to Finished Goods Inventory. 2 Record sale of finished goods for cash. 3 Record the cost of goods sold. Note : journal entry has been entered Record entry x Credit Clear entry View general journal Post entries from parts 1 and 3 to the following general ledger accounts. Raw Materials Inventory Date June 30 Date June 30 Date Date Debit Finished Goods Inventory Debit Sales Debit Factory Overhead Debit Account Number 132 Credit Balance Date Work in Process Inventory Debit Credit 25,000 June 30 Account Number 133 Balance 8,385 Account Number 135 Credit Balance Date Factory Wages Payable Debit Credit Account Number 212 Balance 170,000 Account Number 413 Cost of Goods Sold Credit Balance Date Debit Credit Credit Account Number 540 Balance Account Number 502 Balance Compute the amount of gross profit from the sales in July. Gross profit