Lubricants, Inc., 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 March 1 balance 30,900 Completed and transferredto Blending ? Materials 144,600     Direct labor 80,200     Overhead 475,000     March 31 balance ?       The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,100; direct labor, $3,800; and overhead, $20,000.   Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $16,600; and overhead cost applied to production, $112,000.   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.   Raw materials used in production. Direct labor costs incurred. Manufacturing overhead costs incurred for the entire factory, $706,000. (Credit Accounts Payable.) Manufacturing overhead was applied to production using a predetermined overhead rate. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $672,000. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $740,000. Completed units were sold on account, $1,320,000. The Cost of Goods Sold was $640,000.   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 $ 206,600 Work in process—Blending Department $ 56,000 Finished goods $ 11,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

Lubricants, Inc., 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
March 1 balance 30,900 Completed and transferred
to Blending
?
Materials 144,600    
Direct labor 80,200    
Overhead 475,000    
March 31 balance ?    

 

The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,100; direct labor, $3,800; and overhead, $20,000.

 

Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $16,600; and overhead cost applied to production, $112,000.

 

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.

 

  1. Raw materials used in production.
  2. Direct labor costs incurred.
  3. Manufacturing overhead costs incurred for the entire factory, $706,000. (Credit Accounts Payable.)
  4. Manufacturing overhead was applied to production using a predetermined overhead rate.
  5. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department, $672,000.
  6. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $740,000.
  7. Completed units were sold on account, $1,320,000. The Cost of Goods Sold was $640,000.

 

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 $ 206,600
Work in process—Blending Department $ 56,000
Finished goods $ 11,000
 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 7 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education