Problem 4-5 Two Departments, Journal Entries with Supporting CalculationsWeighted Average Method (Note: This problem includes two departments. The second department may be beyond the scope of most classes. Instructors may choose to assign only the requirements related to Department 1.) Patterson Laboratories, Inc., produces one of its products in two successive departments. All mate- rials are added at the beginning of the process in Department 1; no materials are used in Department 2. Conversion costs are incurred evenly in both departments. Patterson uses the weighted average method for process costing. January 1, 2019, inventory account balances are as follows: Materials inventory ............................................................ $30,000 Work-in-processDepartment 1 (3,000 units, 30% complete) Direct materials............................................................. 4,560 Conversion costs ........................................................... 10,640 Work-in-processDepartment 2 (3,550 units, 40% complete) .......................... 43,439 Finished goods inventory (2,000 units @ $16)....................................... 32,000 During January, the following transactions occurred: 1. Purchased materials on account, $90,000. 2. Placed $84,000 of materials into process in Department 1. This $84,000 represents 24,000 units of materials. 3. Distributed total payroll costs: $108,116 of direct labor to Department 1, $62,700 of direct labor to Department 2, and $51,000 of indirect labor to Manufacturing Overhead. 4. Incurred other actual manufacturing overhead costs, $81,000. (Credit Other Accounts.) 5. Applied overhead to the two processing departments: $88,000 to Department 1 and $43,900 to Department 2. 6. Transferred 25,000 completed units from Department 1 to Department 2. The 2,000 units remaining in Department 1 were 20% completed with respect to conversion costs. 7. Transferred 26,000 completed units from Department 2 to finished goods inventory. The 2,550 units remaining in Department 2 were 70% completed with respect to conversion costs. 8. Sold 20,000 units on account at $27 per unit. Patterson uses weighted average inventory costing procedures for the finished goods inventory. Required a. Record the January transactions in general journal form for Department 1 and Department 2. b. Prepare a product cost report (with its supporting calculations) for Department 1. c. Prepare a product cost report (with its supporting calculations) for Department 2. d. Determine the balances remaining in the Materials Inventory account, in each work-in-process account, and in the Finished Goods Inventory account. a d T-accounts Date Description Debit Credit 1 raw materials inventory 90000 accounts payable 90000 PR Materials Inventory to record purchase on account BB 30,000 usage 84,000 purchases 90,000 2 work in process inventory 84000 120,000 84,000 raw material inventory 84000 to represent 24000 units of materials EB $36,000 3 work in process inventory department 1 108116 Finished Goods Inventory work in process inventory department 2 62700 BB 32,000 cogs 30,000 manufacturing overhead 51000 30,000 wages payable 221816 62,000 30,000 $32,000 4 manufacturing overhead 81000 other accounts 81000 PR Work in Process -- Department 1 to record manufacturing overhead BB 3,000 81,000 direct materials 24,000 5 work in process inventory departnment 1 88000 overhead 88,000 work in process inventory departnment 2 43900 285,500 manufacturing overhead 131900 400,500 81,000 to record applied overhead EB $319,500 6 work in process inventory department 1 285500 work in process inventory department 2 285500 PR Work in Process -- Department 2 BB 28,550 150,039 7 finished goods inventory 400400 285,500 work in process inventory department 2 400400 43,900 81,000 438,950 150,039 8 accounts receivable 540000 sales revenue 540000 EB $288,911 to record sales on account cost of good sold 30000 finished goods inventory 30000 b Flow of units and equivalent units calculation January 2019 Production Where do the units come from? Where do the units go? Equivalent units % work done Direct materials % work done Conversion costs Beginning inventory Started Total $- Total $- $- $- Beginning inventory will be completed and transferred, and units started may either be completed and transferred, or remain in ending inventory. Product cost report Direct materials Conversion costs Beginning inventory $3,000 Current Total costs to account for 3,000 $- $- + Total equivalent units Average cost/equivalent unit Where do the costs go? Completed/transferred: Cost of goods manufactured $- Ending inventory: Cost of ending inventory - Total costs allocated $- c Flow of units and equivalent units calculation January 2019 Production Where do the units come from? Where do the units go? Equivalent units % work done Direct materials % work done Conversion costs Beginning inventory $2,000 Completed/transferred Started Ending inventory Total $2,000 Total $- $- $- Beginning inventory will be completed and transferred, and units started may either be completed and transferred, or remain in ending inventory. Product cost report Direct materials Conversion costs Beginning inventory Current Total costs to account for - $- $- + Total equivalent units Average cost/equivalent unit Where do the costs go? Completed/transferred: Direct materials Conversion costs Cost of goods manufactured $- Ending inventory: Direct materials Conversion costs Cost of ending inventory - Total costs allocated $-