2. Compute the July 31 balances of the inventory accounts.MaterialsWork in Process-Making DepartmentWork in Process-Packing DepartmentFinished Goods3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.Factory Overhead-Making DepartmentFactory Overhead-Packing DepartmentFeethackCreditDebit Entries for Process Cost SystemPreston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company hadfollowing inventories:Finished GoodsWork in Process-MakingWork in Process-PackingMaterials$18,0807,0309,1603,970Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.Manufacturing operations for July are summarized as follows:a. Materials purchased on accountb. Materials requisitioned for use:Phosphate-Making DepartmentPackaging-Packing DepartmentIndirect materials-Making DepartmentIndirect materials-Packing Departmentc. Labor used:Direct labor-Making DepartmentDirect labor-Packing DepartmentIndirect labor-Making DepartmentIndirect labor-Packing Departmentd. Depreciation charged on fixed assets:Making DepartmentPacking Departmente. Expired prepaid factory insurance:Making DepartmentPacking Departmentf. Applied factory overhead:Making DepartmentPacking Departmentg. Production costs transferred from Making Department to Packing Departmenth. Production costs transferred from Packing Department to Finished Goodsi. Cost of goods sold during the period$225,200$148,76051,7405,8202,090$106,28071,74020,58036,900$19,40016,020$3,6801,470$50,72056,040$306,640$482,600$484,370

Production cost includes direct materials, direct labor and overhead applied. Once the products are completed, they are transferred from the making department to the packing department. The job completed in packing department is transferred to the finished goods department.Answers) materials $ 20,760 work in process -Making Department $ 6,150 work in process-Packing Department $ 12,720 finished goods $ 16,310 Working: Materials Ending balance Ending balance = Beginning balance+ purchases - Requisitioned = $3,970+$225,200-($148,760+$51,740+$5,820+$2,090) = $20,760 (The materials requisitioned includes both direct and indirect materials in point b) Work in process-Making department Ending balance =Beginning balance +Direct materials +Direct labor+ overhead applied - transferred to packing department = $7,030+$148,760+$106,280+$50,720-$306,640 =$6,150 Work in process- Packing Department Ending balance =Beginning balance +Transferred in from making department +Direct materials +Direct labor+ overhead applied - transferred to finished goods =$9,160+$306,640+$51,740+$71,740 +$56,040-$482,600 =$12,720 Finished goods Ending balance Ending balance = Beginning balance+ transferred in from packing department - cost of goods sold = $18,080+$482,600-$484,370 =$16,310 Answers) Factory overhead-making department $ 1,240 Credit Factory overhead -packing department $ 440 Debit Working: Factory overhead-making department Ending balance= Applied overhead - (indirect materials +Indirect labor + Depreciation expense + prepaid insurance) = $50,720-($5820+$20,580+$19,400+$3,680) = $1,240 Credit (Since the applied overhead - credit side is higher than the actual overhead incurred - debit side the balance is credit) Factory overhead -packing department Ending balance=(indirect materials +Indirect labor + Depreciation expense + prepaid insurance)- Applied overhead = ($2,090+$36,900+$16,020+$1,470)-$56,040 = $440 debit

Business

Accounting

2. Compute the July 31 balances of the inventory accounts. Materials Work in Process-Making Department Work in Process-Packing Department Finished Goods . Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance. Factory Overhead-Making Department Credit Factory Overhead-Packing Department Debit

2. Compute the July 31 balances of the inventory accounts. Materials Work in Process-Making Department Work in Process-Packing Department Finished Goods . Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance. Factory Overhead-Making Department Credit Factory Overhead-Packing Department Debit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject : Accounting