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

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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	$ 86,000	$ 104,050
Work in process inventoryCutting	203,500	140,500
Work in process inventoryStitching	223,300	110,100
Finished goods inventory	52,100	40,250

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

Direct materials
Raw materials purchased on credit	$ 105,000
Direct materials usedCutting	25,750
Direct materials usedStitching	0

Direct labor
Direct laborCutting	$ 23,600
Direct laborStitching	94,400

Factory Overhead (Actual costs)
Indirect materials used	$ 61,200
Indirect labor used	58,200
Other overhead costs	63,000

Factory Overhead Rates
Cutting	150% of direct materials used
Stitching	120% of direct labor used
Sales	$ 896,000

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:

1. Raw materials purchases
2. Direct materials used
3. Indirect materials used
4. Direct labor used
5. Indirect labor used
6. Other overhead costs paid in cash
7. Overhead applied
8. Goods transferred from Cutting to Stitching
9. Goods transferred from Stitching to finished goods
10. Sales (on account)
11. Cost of goods sold

\begin{tabular}{|l|l|} \hline (a) Transferred to work in process-Stitching & \\ \hline (b) Transferred to finished goods & \\ \hline (c) Cost of goods sold & \\ \hline \end{tabular} Journal entry worksheet Note: Enter debits before credits. Required information Pert 2 of 2