Chapter 3, Problem 22E

Recording Manufacturing Costs in Process Costing
Sereno Company makes piñatas for children's birthday parties. Information's last six months of operation is listed as follows:

Required:
Prepare the journal entries to record each of the following transactions.
(a) Purchased $15,000 of raw materials on credit.
(b) Issued $9,200 of direct raw materials into production.
(c) Recorded $16,500 in direct labor.
(d) Applied $24,000 in manufacturing overhead.
(e) Completed piñatas costing $39,500.
(f) Recorded $16,000 in actual manufacturing overhead.
(g) Sold piñatas for $66,000 that cost $44,000 to produce.

To determine

(a)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affect the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entry relatedto Purchasing raw materialsof$15,600on credit.

Answer to Problem 22E

To journalize the transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Raw material inventory		$15,600
	Accounts payable			$15,600
	(To record the purchase of rawmaterial on accounts)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.

To determine

(b)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affects the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entry related to issuing direct materialsof$9,200 for production.

Answer to Problem 22E

To journalize the transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Work in process inventory		$9,200
	Raw material inventory			$9,200
	(To record the issues of rawmaterial of production)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.

To determine

(c)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affects the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entry of $16,500 in direct labor.

Answer to Problem 22E

To journalize the transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Work in process inventory		$16,500
	Wages payable			$16,500
	(To record the labor cost incurred)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.

To determine

(d)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affects the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entry related to $24,000applied in manufacturing overhead.

Answer to Problem 22E

To journalize to transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Work in process inventory		$24,000
	Manufacture overhead			$24,000
	(To record the manufacture overhead cost incurred)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.

To determine

(e)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affects the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entry related to completion of pinatas costing $39,500.

Answer to Problem 22E

To journalize to transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Finished goods inventory		$39,500
	Work in process inventory			$39,500
	(To record the manufacture overhead cost incurred)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.

To determine

(f)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affects the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entry related torecording $16,000in manufacturing overhead.

Answer to Problem 22E

To journalize to transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Manufacturing overhead		$16,000
	Accounts payable			$16,000
	(To record the actual manufacture overhead cost incurred)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.

To determine

(g)

Introduction:

Journalizing is a process identifying and recording the transactions of business in the books of accounts in a chronological order. The accountant needs to recognize and examine the transactions that affects the business and record each entry in a journal accompanied by date and description of the transaction. The entries are recorded as the debit and credit balances.

To record:

The journal entries related toselling piñatas for$66,000 that costed $44,000 to produce.

Answer to Problem 22E

To journalize to transation:

Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Cost of goods sold		$44,000
	Finishing goods inventroy			$44,000
	(To record the cost of goods sold)
Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Cash		$66,000
	Sales revenue			$66,000
	(To record Sales of goods)
Date	Accounts title and explanation	Post Ref.	Debit ($)	Credit ($)
	Sales revenue		$66,000
	Cost of goods sold			$44,000
	Profit on sales of goods			$22,000
	(To record the Profit realized on sales of goods)

Explanation of Solution

The golden rules of accounting that are needed to be kept in mind for journalizing:

1. Personal account: The receiver needs to be debited; the giver needs to be credited.
2. Real account: What comes in needs to be debited; what goes out needs to be credited.
3. Nominal account: All expenses and losses need to be debited; all incomes and gains needs to be credited.