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 $21,160 Work in Process—Making 8,220 Work in Process—Packing 10,720 Materials 4,640 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 $263,500 b. Materials requisitioned for use Phosphate—Making Department $174,060 Packaging—Packing Department 60,540 Indirect materials—Making Department 6,810 Indirect materials—Packing Department 2,440 c. Labor used Direct labor—Making Department $124,360 Direct labor—Packing Department 83,940 Indirect labor—Making Department 24,080 Indirect labor—Packing Department 43,170 d. Depreciation charged on fixed assets Making Department $22,700 Packing Department 18,750 e. Expired prepaid factory insurance Making Department $4,300 Packing Department 1,720 f. Applied factory overhead Making Department $59,340 Packing Department 65,570 g. Production costs transferred from Making Department to Packing Department $358,790 h. Production costs transferred from Packing Department to Finished Goods $564,680 i. Cost of goods sold during the period $566,740 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.
| No. | Account titles and explanation | Debit | Credit |
| a | Materials | $263500 | |
| Account payable | $263500 | ||
| (To record materials purchased on account) | |||
| b | Work in process- Making | $174060 | |
| Work in process- Packing | $60540 | ||
| Factory overhead- Making | $6810 | ||
| Factory overhead- Packing | $2440 | ||
| Materials | $243850 | ||
| (To record materials transferred to work in process and factory overhead) | |||
| c | Work in process- Making | $124360 | |
| Work in process- Packing | $83940 | ||
| Factory overhead- Making | $24080 | ||
| Factory overhead- Packing | $43170 | ||
| Wages payable | $275550 | ||
| (To record materials transferred to work in process and factory overhead) | |||
| d | Factory overhead- Making | $22700 | |
| Factory overhead- Packing | $18750 | ||
| Accumulated depreciation | $41450 | ||
| (To record depreciation expense) | |||
| e | Factory overhead- Making | $4300 | |
| Factory overhead- Packing | $1720 | ||
| Prepaid insurance | $6020 | ||
| (To record prepaid insurance expired) | |||
| f | Work in process- Making | $59340 | |
| Work in process- Packing | $65570 | ||
| Factory overhead- Making | $59340 | ||
| Factory overhead- Packing | $65570 | ||
| (To record factory overhead applied) | |||
| g | Work in process- Packing | $358790 | |
| Work in process- Making | $358790 | ||
| (To record transferred of Production department from making department to packing department ) | |||
| h | Finished goods | $564680 | |
| Work in process- Packing | $564680 | ||
| (To record transferred of Production department from packing department to finished goods) | |||
| i | Cost of goods sold | $566740 | |
| Finished goods | $566740 | ||
| (To record cost of goods sold) | |||
2)
| Materials Inventory | |||
| Jul 1 Beg. bal. | $4640 | b | 243850 |
| a | 263500 | ||
| Jul 31 End. bal. | $24290 | ||
Calculation of ending materials inventory= $4640+263500-243850= $24290
| Work in Process- Making Department | |||
| Jul 1 Beg. bal. | $8220 | g | 358790 |
| b | 174060 | ||
| c | 124360 | ||
| f | 59340 | ||
| Jul 31 End. bal. | $7190 | ||
Calculation of Ending Work in Process- Making Department= $8220+174060+124360+59340-358790= $7190
| Work in Process- Packing Department | |||
| Jul 1 Beg. bal. | $10720 | ||
| b | 60540 | ||
| c | 83940 | ||
| f | 65570 | ||
| g | 358790 | ||
| Jul 31 End. bal. | $579560 | ||
Calculation of Ending Work in Process- Packing Department= $10720+60540+83940+65570+358790= $579560
| Finished Goods Inventory | |||
| Jul 1 Beg. bal. | $21160 | i | 566740 |
| h | 564680 | ||
| Jul 31. End. bal. | $19100 | ||
Calculation of Ending Finished goods inventory= $21160+564680-566740= $19100
3)
| Factory overhead- Making department | |||
| Jul 1 Beg. bal. | $0 | f | 59340 |
| b | 6810 | ||
| c | 24080 | ||
| d | 22700 | ||
| e | 4300 | ||
| Jul 31. End. bal. | $1450 | ||
Calculation of Ending Factory overhead- Making Department= $0+6810+24080+22700+4300-59340= $-1450 Credit
| Factory overhead- Packing department | |||
| Jul 1 Beg. bal. | $0 | f | 65570 |
| b | 2440 | ||
| c | 43170 | ||
| d | 18750 | ||
| e | 1720 | ||
| Jul 31. End. bal. | $510 | ||
Calculation of Ending Factory overhead- Packing Department= $0+2440+43170+18750+1720-65570= $510 Debit
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