Problem 20-5A (Algo) Production cost flow and measurement; journal entries LO P3, P4

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[The following information applies to the questions displayed below.] Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the cutting process. The following information is available regarding its May inventories.

	Beginning Inventory	Ending Inventory
Raw materials inventory	$ 96,000	$ 116,350
Work in process inventoryCutting	223,500	150,500
Work in process inventoryStitching	243,300	116,300
Finished goods inventory	56,100	44,250

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

Direct materials
Raw materials purchased on credit	$ 115,000
Direct materials usedCutting	26,250
Direct materials usedStitching	0

Direct labor
Direct laborCutting	$ 24,600
Direct laborStitching	98,400

Factory Overhead (Actual costs)
Indirect materials used	$ 68,400
Indirect labor used	58,600
Other overhead costs	65,000

Factory Overhead Rates
Cutting	150% of direct materials used
Stitching	120% of direct labor used
Sales	$ 976,000

Problem 20-5A (Algo) Part 1

Required: 1. Compute the amount of (a) production costs transferred from Cutting to Stitching, (b) production costs transferred from Stitching to finished goods, and (c) cost of goods sold. Hint: Compute the total production costs in each department and then subtract the ending inventory to get the amount transferred out of each department.

2. Prepare May 31 journal entries to record the following May activities:

a. Raw materials purchases b. Direct materials used c. Indirect materials used d. Direct labor used e. Indirect labor used f. Other overhead costs paid in cash g. Overhead applied h. Goods transferred from Cutting to Stitching i. Goods transferred from Stitching to finished goods j. Sales on accounts k. Cost of goods sold