Two Departments, Journal Entries with Supporting CalculationsWeighted Average Method

Parker Laboratories, Inc., produces one of its products in two successive departments. All materials 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. Parker uses the weighted average method for process costing. August 1, 2016, inventory account balances are as follows:

Materials inventory $30,000
Work in process - Department 1 (6,000 units, 25% complete)
Direct materials	23,000
Conversion costs	37,500
Work in process - Department 2 (4,000 units, 35% complete)	82,000
Finished goods inventory (4,000 units @ $12.50)	100,000

During August, the following transactions occurred: 1. Purchased material on account, $116,000. 2. Placed 16,000 units of material at $8 per unit into process in Department 1. 3. Distributed total payroll costs: $167,540 of direct labor to Department 1, $84,600 of direct labor to Department 2, and $38,200 of indirect labor to Manufacturing Overhead. 4. Incurred other actual manufacturing overhead costs, $42,400. (Credit Other Accounts.) 5. Applied overhead to the two processing departments: Department 1, $42,560, Department 2, $35,800 6. Transferred 20,000 completed units from Department 1 to Department 2. The 2,000 units remaining in Department 1 were 30% completed with respect to conversion costs. 7. Transferred 15,000 completed units from Department 2 to Finished Goods Inventory. The 9,000 units remaining in Department 2 were 40% completed with respect to conversion costs. 8. Sold 13,000 units on account at $48 per unit. Parker uses weighted average inventory costing for finished goods inventory.

a. Record the August transactions in general journal form for Department 1 and Department 2. Hint: Complete the product cost reports for Departments 1 and 2 before entering journal entries for transactions 6, 7, and 8.

General Journal
Ref.	Description	Debit	Credit
1.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
2.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
3.	Work in process - Department 1	Answer	Answer
	Work in process - Department 2	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
4.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	Other accounts	Answer	Answer
5.	Work in process - Department 1	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
6.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
7.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
8.	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	To record sales.
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	AnswerAccounts payableAccounts receivableFinished goods inventoryManufacturing overheadMaterials inventoryOther accountsSalesWages payableWork in process - Department 1Work in process - Department 2Cost of goods sold	Answer	Answer
	To record cost of goods sold.

b. Prepare a product cost report (with its supporting calculations) for Department 1. Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.

Parker Laboratories, Inc. Department 1 Flow of Units and Equivalent Units Calculations, August 2016
		Equivalent Units
		% Work	Direct	% Work	Conversion
		Done	Materials	Done	Costs
Complete/Transferred	Answer	Answer%	Answer	Answer%	Answer
Ending Inventory	Answer	Answer%	Answer	Answer%	Answer
Total	Answer		Answer		Answer

Product Cost Report
		Direct	Conversion
		Materials	Costs
Beginning Inventory	$Answer	$Answer	$Answer
Current	Answer	Answer	Answer
Total Costs to Account For	$Answer	$Answer	$Answer
Total Equivalent Units		Answer	Answer
Average cost / Equivalent unit (round 4 decimal places)		$Answer	$Answer
Complete / Transferred:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Goods Manufactured	$Answer
Ending Inventory:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Ending Inventory	$Answer
Total Costs Allocated	$Answer

c. Prepare a product cost report (with its supporting calculations) for Department 2. Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.

Parker Laboratories, Inc. Department 2 Flow of Units and Equivalent Units Calculations, August 2016
		Equivalent Units
		% Work	Direct	% Work	Conversion
		Done	Materials	Done	Costs
Complete/Transferred	Answer	Answer%	Answer	Answer%	Answer
Ending Inventory	Answer	Answer%	Answer	Answer%	Answer
Total	Answer		Answer		Answer

Product Cost Report
		Direct	Conversion
		Materials	Costs
Beginning Inventory	$Answer	$Answer	$Answer
Current	Answer	Answer	Answer
Total Costs to Account For	$Answer	$Answer	$Answer
Total Equivalent Units		Answer	Answer
Average cost / Equivalent unit (round 4 decimal places)		$Answer	$Answer
Complete / Transferred:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Goods Manufactured	$Answer
Ending Inventory:
Direct Materials	$Answer
Conversion costs	Answer
Cost of Ending Inventory	$Answer
Total Costs Allocated	$Answer

d. Determine the balances remaining in the Materials Inventory account, in each work in process account, and in the Finished Goods Inventory account.

Materials Inventory
Bal.	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Work in Process- Dept. 1
Bal.	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Work in Process- Dept. 2
Bal.	Answer	Answer
	Answer	Answer
	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer

Finished Goods Inventory
Bal.	Answer	Answer
	Answer	Answer
Bal.	Answer	Answer