Question

Instructions

In December, Davis Company had the following cost flows:

	Molding Department	Grinding Department	Finishing Department
Direct materials	$111,700	$30,500	$17,600
Direct labor	7,800	14,200	11,600
Applied overhead	7,900	60,300	11,600
Transferred-in cost:
From Molding		127,400
From Grinding			232,400
Total cost	$127,400	$232,400	$273,200

	Required:
1.	Prepare the journal entries to transfer costs from (a) Molding to Grinding, (b) Grinding to Finishing, and (c) Finishing to Finished Goods.
2.	CONCEPTUAL CONNECTION: Explain how the journal entries differ from a job-order cost system.

X

Chart of Accounts

CHART OF ACCOUNTS

Davis Company

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
130	Raw Materials
142	Work in Process-Grinding
143	Work in Process-Molding
144	Work in Process-Finishing
150	Overhead Control
160	Finished Goods
180	Accumulated Depreciation

	LIABILITIES
210	Accounts Payable
220	Wages Payable
230	Utilities Payable
240	Lease Payable
250	Other Payables

	EQUITY
310	Common Stock
320	Retained Earnings

	REVENUE
410	Sales

	EXPENSES
510	Cost of Goods Sold
520	Insurance Expense
530	Wages Expense
540	Supplies Expense
550	Utilities Expense
560	Depreciation Expense
590	Miscellaneous Expense

X

Journal

1. Prepare the Dec. 31 journal entries to transfer costs from (a) Molding to Grinding, (b) Grinding to Finishing, and (c) Finishing to Finished Goods. Refer to the Chart of Accounts for the exact wording of account titles.

PAGE 15

GENERAL JOURNAL

	DATE	ACCOUNT	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6

Answer 1

1) Journal Entry
Date	Account	Debit	Credit
1)	Work in process-Grinding department	127,400
	Work in process-Molding department		127,400
2)	Work in process-Finishing department	232,400
	Work in process-Grinding department		232,400
3)	Finished goods Inventory	273,200
	Work in process-Finishing department		273,200
2) The Journal entries under process accounting and Job order costing method differ. The costs under process costing are transferred in each process separately to work in process account. Then the cost of each process is transferred to next process and finally to finished goods account. Under Job order costing, all the costs are transferred to particular Job account and finally to finished goods account.