
Concept explainers
1.
Calculate the equivalent units of transferred-in, direct materials and conversion using weighted average method.
1.

Explanation of Solution
Equivalents units for production: Equivalents units are a measure of the work done during an accounting period. It includes the beginning and closing inventory of work in process and they also provide information relating to work on units that are completely processed during the period
Calculate the equivalent units of transferred-in, direct materials and conversion using weighted average method.
(Table 1)
2.
Compute the unit cost of transferred-in, direct materials and conversion department.
2.

Explanation of Solution
Compute the unit cost of transferred-in, direct materials and conversion department.
(Table 2)
3.
Determine the amount goods completed and transferred out during July.
3.

Explanation of Solution
Compute the amount goods completed and transferred out during July.
Therefore, the amount goods completed and transferred out during July is $357,750.
4.
Calculate the cost of work in process for the month of July.
4.

Explanation of Solution
Calculate the cost of work in process of transferred-in for the month of July.
Calculate the cost of work in process of conversion for the month of July.
Therefore, the cost of work in process for the month July is
5.
Prepare
5.

Explanation of Solution
Prepare journal entry to record the materials.
Date | Accounts title and explanation |
Debit ($) |
Credit ($) |
Work in process inventory | 60,750 | ||
Materials inventory | 60,750 | ||
(To record the direct materials) |
(Table 3)
- Work in process inventory is an asset and there is an increase in the value of an asset. Hence, debit the work in process inventory $60,750.
- Materials inventory is an asset and there is a decrease in the value of an asset. Hence, credit the materials inventory by $60,750.
Prepare journal entry to record the labor assuming that labor is 50% of conversion cost.
Date | Accounts title and explanation |
Debit ($) |
Credit ($) |
Work in process inventory (1) | 55,000 | ||
Accrued payroll | 55,000 | ||
(To record the direct materials) |
(Table 4)
- Work in process inventory is an asset and there is an increase in the value of an asset. Hence, debit the work in process inventory $55,000
- Accrued payroll is an expense and there is an increase in the value of equity. Hence, credit accrued payroll by $55,000.
Prepare journal entry to record the
Date | Accounts title and explanation |
Debit ($) |
Credit ($) |
Work in process inventory | 55,000 | ||
Factory overhead | 55,000 | ||
(To record |
(Table 5)
- Work in process inventory is an asset and there is an increase in the value of an asset. Hence, debit the work in process inventory account with $55,000.
- Factory overhead (Expense) is a component of
stockholder’s equity and there is a decrease value of expense. Hence, credit the factory overhead account by $55,000.
Prepare journal entry to record the finished product.
Date | Accounts title and explanation |
Debit ($) |
Credit ($) |
Finished goods inventory | 357,750 | ||
Work in process inventory | 357,750 | ||
(To transfer cost of jobs completed to finished goods inventory) |
(Table 6)
- Finished goods inventory is an asset and there is an increase in the value of an asset. Hence, debit the finished goods inventory account with $357,750.
- Work in process inventory is an asset and there is a decrease in the value of an asset. Hence, credit the work in process inventory account with $357,750.
Working notes:
Calculate the amount of labor cost.
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