Question

Entries for Process Cost System

Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories:

Finished Goods	$19,190
Work in Process—Making	7,460
Work in Process—Packing	9,720
Materials	4,210

Departmental accounts are maintained for factory overhead, which both have zero balances on July 1.

Manufacturing operations for July are summarized as follows:

a.	Materials purchased on account		$238,990
b.	Materials requisitioned for use
		Phosphate—Making Department	$157,870
		Packaging—Packing Department	54,910
		Indirect materials—Making Department	6,180
		Indirect materials—Packing Department	2,220
c.	Labor used
		Direct labor—Making Department	$112,790
		Direct labor—Packing Department	76,130
		Indirect labor—Making Department	21,840
		Indirect labor—Packing Department	39,160
d.	Depreciation charged on fixed assets
		Making Department	$20,590
		Packing Department	17,000
e.	Expired prepaid factory insurance
		Making Department	$3,900
		Packing Department	1,560
f.	Applied factory overhead
		Making Department	$53,820
		Packing Department	59,470
g.	Production costs transferred from Making Department to Packing Department		$325,420
h.	Production costs transferred from Packing Department to Finished Goods		$512,150
i.	Cost of goods sold during the period		$514,020

Required:

1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Item	Account	Debit	Credit
a.
b.
c.
d.
e.
f.
g.
h.
i.

2. Compute the July 31 balances of the inventory accounts.

Materials	$
Work in Process—Making Department	$
Work in Process—Packing Department	$
Finished Goods	$

3. Compute the July 31 balances of the factory overhead accounts. If required, use the minus sign to indicate a credit balance.

Factory Overhead—Making Department	$
Factory Overhead—Packing Department	$

Answer 1