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, $8,135 ($2,660 of direct materials and $5,475 of conversion); Finished Goods Inventory, $110,000, 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 $125,000 cash (the company uses a perpetual inventory system). b. Used raw materials as follows: direct materials, $52,440, and indirect materials, $10,000. c. Recorded factory payroll payable costs as follows: direct labor, $202,250, and indirect labor, $25,000. d. Paid factory payroll cost of $227,250 with cash (ignore taxes). e. Incurred additional factory overhead costs of $80,000 paid in cash. f. Allocated factory overhead to production at 50% of direct labor costs. View transaction list View journal entry worksheet General Journal Debit Credit No 1 Transaction a. Raw materials inventory Cash 2 b. Work in process inventory Factory overhead Raw materials inventory 3 Work in process inventory Factory overhead Factory wages payable Factory wages payable Cash Factory overhead Cash Work in process inventory Factory overhead 2. Information about the July inventories follows. Use this information with that from part 1 to prepare a process cost summary, assuming the weighted average method is used. (Round "Cost per EUP" to 2 decimal places.) 5,000 units 14,000 units 8,000 units Units Beginning inventory Started Ending inventory Beginning inventory Materials-Percent complete Conversion-Percent complete Ending inventory Materials-Percent complete Conversion-Percent complete 1008 75% 1008 403 Total costs to account for: Cost of beginning work in process Costs incurred this period Total costs to account for: s Unit reconciliation: Units to account for: Beginning work in process inventory - units Units started this period Total units to account for Total units accounted for: Units completed and transferred out Ending work in process - units Total units accounted for Equivalent units of production (EUP)- weighted average method Units Units completed and transferred out Ending work in process - units Total units Cost per equivalent unit of production Cost of beginning work in process Costs incurred this period Total costs - Equivalent units of production Cost per equivalent unit of production (rounded to 2 decimals) % Materials EUP- Materials EUP- Conversion 100% 100% % Labor 100% 40% Materials Conversion Costs Costs EUP EUP Cost per EUP Total cost Cost per equivalent unit of production (rounded to 2 decimals) Total costs accounted for: Cost of units transferred out: EUP Direct materials Conversion Total costs transferred out Costs of ending goods in process EUP Direct materials Conversion Total cost of ending goods in process Total costs accounted for Cost per EUP $ 0.00 $ 0.00 Total cost $ 0 3. Using the results from part 2 and the available information, make computations and prepare journal entries to record the following: g. Total costs transferred to finished goods for July h. Sale of finished goods costing $265,700 for $625,000 in cash. View transaction list View journal entry worksheet Debit Credit No 1 Transaction g. General journal Finished goods inventory Work in process inventory 2 h. Cash Sales Cost of goods sold Finished goods inventory 4. Post entries from parts 1 and 3 to the following general ledger accounts. Raw Materials Inventory Debit Credit Acct. No. 132 Balance Date June 30 Work in Process Inventory Date Debit Credit June 30 (b) Acct. No. 133 Balance 8,135 (6) 13 Finished Goods Inventory Debit Credit Acct. No. 135 Balance 110,000 Factory Wages Payable Debit Credit Date Acct. No. 212 Balance Date June 30 Sales Debit Acct. No. 413 Balance Cost of Goods Sold Debit Acct. No. 502 Balance Date Credit Date Credit (h) (h) Date Factory Overhead Debit Credit Acct. No. 540 Balance 5. Compute the amount of gross profit from the sales in July (Add any underapplied overhead to, or deduct any overapplied overhead from, the cost of goods sold.)
