Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4

Sierra Company manufactures woven blankets and accounts for product costs using process costing. The company uses a single processing department. The following information is available regarding its May inventories.

Beginning Inventory

Ending Inventory

Raw materials inventory

$

60,000

$

92,500

Work in process inventory

435,000

515,000

Finished goods inventory

633,000

605,000

The following additional information describes the company's production activities for May.

Raw materials purchases (on credit)	$	250,000
Factory payroll cost (paid in cash)		1,530,000
Other overhead cost (Other Accounts credited)		87,000
Materials used
Direct	$	157,500
Indirect		60,000
Labor used
Direct	$	780,000
Indirect		750,000
Overhead rate as a percent of direct labor		115	%
Sales (on credit)	$	2,500,000

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Problem 20-1A Part 1

Required:

1.

Compute the cost of products transferred from production to finished goods and cost of goods sold.

Link to table(s): https://gyazo.com/5f290724362a400a27cc27d20f1243fa

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Problem 20-1A Part 2

2

Prepare summary journal entries dated May 31 to record the following production activities during May: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) direct labor costs incurred, (e) indirect labor costs incurred, (f) payment of factory payroll, (g) other overhead costs, (h) overhead applied, (i) goods transferred from production to finished goods, and (j) sale of finished goods. 1. Record purchase of raw materials. 2. Record direct materials used in production. 3. Record indirect materials used in production. 4. Record direct labor cost incurred, but not yet paid. 5. Record indirect labor cost incurred, but not yet paid. 6. Record payment of total factory payroll. 7. Record other overhead costs incurred (credit Other accounts). 8. Record overhead applied at 115% of direct labor cost. 9. Record the transfer of completed products from production to finished goods inventory. 10. Record the sale of finished goods. 11. Record cost of goods sold for May.