Required information Problem 20-5A (Algo) Production cost flow and measurement; journal entries LO P3, P4 [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 $ 66,000 Ending Inventory $ 79,450 163,500 183,300 44,100 Raw materials inventory. Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory 120,500 97,700 32,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching Direct labor $ 85,000 24,750 0 Direct labor-Cutting Direct labor-Stitching $ 21,600 86,400 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs Factory Overhead Rates Cutting Stitching Sales $ 46,800 57,400 59,000 150% of direct materials used 120% of direct labor used $736,000 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. (a) Transferred to work in process-Stitching (b) Transferred to finished goods (c) Cost of goods sold es 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 account) k. Cost of goods sold Sierra Company production at the beginning of the cutting process. Raw materials inventory Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory Beginning Inventory Ending Inventory $ 66,000 163,500 $ 79,450 120,500 183,300 44,100 97,700 32,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching Direct labor $ 85,000 24,750 Direct labor-Cutting Direct labor-Stitching Factory Overhead (Actual costs) Indirect materials used Indirect labor used $ 21,600 86,400 $ 46,800 57,400 59,000 Other overhead costs Factory Overhead Rates: Cutting Stitching Sales 150% of direct materials used 120% of direct labor used $736,000