Backflush Costing: Variation 2 Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: Raw materials purchased $245,000 Direct labor cost 41,500 Overhead cost 207,500 Conversion cost applied 269,750* *$41,500 labor plus $228,250 overhead. There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order: (a) purchase of raw materials, (b) incurrence of direct labor and overhead costs, (c) cost of sales, (d) sales revenue, and (e) recognition of the variance between applied and act
Backflush Costing: Variation 2 Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: Raw materials purchased $245,000 Direct labor cost 41,500 Overhead cost 207,500 Conversion cost applied 269,750* *$41,500 labor plus $228,250 overhead. There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.) Required: Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order: (a) purchase of raw materials, (b) incurrence of direct labor and overhead costs, (c) cost of sales, (d) sales revenue, and (e) recognition of the variance between applied and act
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Backflush Costing: Variation 2
Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions:
| Raw materials purchased | $245,000 |
| Direct labor cost | 41,500 |
| 207,500 | |
| Conversion cost applied | 269,750* |
*$41,500 labor plus $228,250 overhead.
There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.)
Required:
Prepare the
![**Backflush Costing: Variation 2**
Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions:
- Raw materials purchased: $245,000
- Direct labor cost: $41,500
- Overhead cost: $207,500
- Conversion cost applied: $269,750*
(*$41,500 labor plus $228,250 overhead.)
There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.)
**Required:**
Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods. *For a compound transaction, if an amount box does not require an entry, leave it blank.* Prepare your entries in the following order: (a) purchase of raw materials, (b) incurrence of direct labor and overhead costs, (c) cost of sales, (d) sales revenue, and (e) recognition of the variance between applied and actual production costs.
- **a.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **b.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **c.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **d.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **e.**
[Account] ____________________ [Debit] ______ [Credit] ______](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5e61f1c8-5f75-42be-83a4-b313e68cb3a1%2Ff64cfaa9-be48-4dd4-a73d-e4eee4a40d64%2Fpvr6vl_processed.png&w=3840&q=75)
Transcribed Image Text:**Backflush Costing: Variation 2**
Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions:
- Raw materials purchased: $245,000
- Direct labor cost: $41,500
- Overhead cost: $207,500
- Conversion cost applied: $269,750*
(*$41,500 labor plus $228,250 overhead.)
There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.)
**Required:**
Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods. *For a compound transaction, if an amount box does not require an entry, leave it blank.* Prepare your entries in the following order: (a) purchase of raw materials, (b) incurrence of direct labor and overhead costs, (c) cost of sales, (d) sales revenue, and (e) recognition of the variance between applied and actual production costs.
- **a.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **b.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **c.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **d.**
[Account] ____________________ [Debit] ______ [Credit] ______
- **e.**
[Account] ____________________ [Debit] ______ [Credit] ______
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