Lubricants, Incorporated, produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments-Refining and Blending. Raw materials are introduced at various points in the Refining Department. The following incomplete Work in Process account is available for the Refining Department for March: Work in Process-Refining Department Debit Credit March 1 balance 38,000 Completed and transferred to Blending Materials 495,000 Direct labor 72,000 Overhead 181,000 March 31 balance The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $25,000; direct labor, $4,000, and overhead, $9,000. Costs incurred during March in the Blending Department were: materials used, $115,000; direct labor, $18,000; and overhead cost applied to production, $42,000. Required: 1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below. a. Raw materials used in production. b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire factory, $225,000. (Credit Accounts Payable.) d. Manufacturing overhead was applied to production using a predetermined overhead rate. e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $740,000. f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $950,000. g. Completed units were sold on account, $1,500,000. The Cost of Goods Sold was $900,000. 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department's Work in Process is given in the T-account shown above.) Raw materials Work in process-Blending Department Finished goods $ 618,000 $ 65,000 $ 20,000 Required 1 Required 2 Post the journal entries from Requirement 1 to T-accounts. Accounts Receivable Debit Credit Beginning Balance Raw Materials Credit Debit Beginning Balance 9 1,500,000 Ending Balance 1,500,000 Ending Balance Work in Process-Refining Department Debit Credit Beginning Balance Work in ProcessBlending Department Debit Credit Beginning Balance Ending Balance Ending Balance 0 Finished Goods Manufacturing Overhead Debit Debit Credit Credit Beginning Balance Beginning Balance Ending Balance 0 Ending Balance Accounts Payable Debit Credit Salaries and Wages Payable Debit Beginning Balance Credit Beginning Balance Ending Balance Ending Balance 0 Sales Cost of Goods Sold Credit Debit Credit Debit Beginning Balance Beginning Balance Ending Balance 0 Ending Balance 0
