Shutter,Inc. is a manufacturer of digital cameras. It has two departments: assembly and testing. In January2017,the company incurred$850,000on direct materials and$805,000on conversion costs, for a total manufacturing cost of$1,655,000.During February5,000cameras are placed into production, but only3,000cameras are fully completed at the end of the month. All direct materials have been added to the remaining2,000cameras. However, on average, these remaining2,000cameras are only60%complete as to conversion costs.1(Clickthe icon to view the data on the cameras.) Read therequirement2. Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. (Record debits first, then credits. Exclude explanations from any journal entries.) Begin by recording the purchase and use of direct materials. Journal EntryDateAccountsDebitCreditJE 1 (1) (2) (3) (4) Record the conversion costs. Journal EntryDateAccountsDebitCreditJE 2 (5) (6) (7) (8) Prepare a journal entry to transfer out the cost of goods completed. Journal EntryDateAccountsDebitCreditJE 3 (9) (10) (11) (12) Show the postings to the Work in Process account. Work in Process—Assembly DepartmentBal.0 (13) (14) (15) (16) (17) (18) Bal. Bal. 1: Reference Direct MaterialsConversion CostsTotalCosts incurred during the period$850,000$805,000 Equivalent units of work done in the current period5,0004,200 Cost per equivalent unit$170.00$191.67$361.672: RequirementPrepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out the cost of goods completed. Show the postings to the Work in Process account.

Process Costing is an accounting methodology that accumulates direct costs and allocates indirect…

Answered: hutter, Inc. is a manufacturer of…

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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Shutter,

Inc. is a manufacturer of digital cameras. It has two departments: assembly and testing. In January

2017,

the company incurred

$850,000

on direct materials and

$805,000

on conversion costs, for a total manufacturing cost of

$1,655,000.

During February

5,000

cameras are placed into production, but only

3,000

cameras are fully completed at the end of the month. All direct materials have been added to the remaining

2,000

cameras. However, on average, these remaining

2,000

cameras are only

60%

complete as to conversion costs.

1(Click

the icon to view the data on the cameras.)

Read the

requirement2.

Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. (Record debits first, then credits. Exclude explanations from any journal entries.)

Begin by recording the purchase and use of direct materials.

Journal Entry
Date	Accounts	Debit	Credit
JE 1		(1)
		(2)
		(3)
		(4)

Record the conversion costs.

Journal Entry
Date	Accounts	Debit	Credit
JE 2		(5)
		(6)
		(7)
		(8)

Prepare a journal entry to transfer out the cost of goods completed.

Journal Entry
Date	Accounts	Debit	Credit
JE 3		(9)
		(10)
		(11)
		(12)

Show the postings to the Work in Process account.

Work in Process—Assembly Department
Bal.	0
(13)		(14)
(15)		(16)
(17)		(18)
Bal.		Bal.

1: Reference

	Direct Materials	Conversion Costs	Total
Costs incurred during the period	$850,000	$805,000
Equivalent units of work done in the current period	5,000	4,200
Cost per equivalent unit	$170.00	$191.67	$361.67

2: Requirement

Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out the cost of goods completed. Show the postings to the Work in Process account.

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