Chapter 18, Problem 18.7APE

a.

To determine

Process costs

It is a method of cost accounting, which is used where the production is continuous, and the product needs various processes to complete. This method is used to ascertain the cost of the product at each process or stage of production.

To Prepare: The journal entry.

Explanation of Solution

Prepare the journal entry to record the cost of transferred in materials from casting department to rolling department of Company LSC as shown below:

Date		Debit	Credit
	Work In process - Filling department	$20,250
	Work In process – Blending department		$14,250
	Materials		$6,000
	(To record direct materials transferred from blending department to filling department)

Table (1)

• Work in process inventory – Filling department is a current asset, and increased. Therefore, debit work in process inventory – Filling department account for $20,250.
• Work in process inventory – Blending department is a current asset, and decreased. Therefore, credit work in process inventory – Blending department account for $14,250.
• Materials inventory is a current asset, decreased. Therefore, credit materials inventory account for $6,000.

(2) Prepare the journal entry to record the cost of transferred in the conversion costs from casting department to rolling department of Company LSC as shown below:

Date	Account title and Explanation	Debit	Credit
	Work In process - Filing department	$6,372
	Factory Overhead – Filling department		$1,600
	Wages payable		$4,772
	(To record conversion costs transferred from blending department to filling department)

Table (2)

• Work in process inventory – Filling department is a current asset, and increased. Therefore, debit work in process inventory – Filling department account for $6,372.
• Factory overhead – Filling department is a component of stockholders’ equity and increased it. Therefore, credit the factory overhead – filling department account for $1,600.
• Wages payable is a current liability and increased. Therefore, credit wages payable account for $4,772.

(3) Prepare the journal entry to record the cost transferred out to finished goods of Company LSC as shown below:

Date	Account title and Explanation	Debit	Credit
	Finished goods	$25,660
	Work in process- Filling department		$25,660
	(To record transferred work in process to finished goods)

Table (3)

• Finished goods inventory is a current asset, and increased. Therefore, debit finished goods inventory account for $25,660.
• Work in process inventory – Filling department is a current asset and decreased. Therefore, credit work in process inventory – Filling department account for $25,660.

b.

To determine

The balance of ending work in process – Filling department of Company LSC.

Answer to Problem 18.7APE

Calculate the ending working process balance of filling department for Company LSC as shown below:

Particulars	Amount ($)
Opening work in process - Filling Department	2,200
Add: Work in process for direct materials	20,250
Work in process for conversion costs	6,372
Total	28,822
Less: Finished goods - Filling department	(25,660)
Ending work in process – Filling Department	3,162

Table (4)

Explanation of Solution

Ending work in process of rolling department is calculated by adding opening work in process of rolling department, work in process for direct materials, work in process for conversion costs and then deducts finished goods for rolling department. Therefore, ending work in process of rolling department of Company LSC is $3,162.

Conclusion

Hence, ending work in process of rolling department of Company LSC is $3,162.