Concept explainers
a.
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
a.

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

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.
Hence, ending work in process of rolling department of Company LSC is $3,162.
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Chapter 18 Solutions
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