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Cost of Production and Journal Entries
Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into a vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March.
Account Work in Process—Papermaking Department | Account No. | ||||||||
Date | Item | Debit | Credit | Balance | |||||
Debit | Credit | ||||||||
Mar. | 1 | Bal., 7,200 units, 30% completed | 13,104 | ||||||
31 | Direct materials, 38,400 units | 49,920 | 63,024 | ||||||
31 | Direct labor | 16,060 | 79,084 | ||||||
31 | Factory overhead | 9,032 | 88,116 | ||||||
31 | Goods transferred, 42,900 units | ? | ? | ||||||
31 | Bal., 2,700 units, 40% completed | ? |
a1. Prepare the March journal entry for the Papermaking Department for the materials charged to production.
Work in Process-Papermaking Department | |||
Materials-Pulp |
Feedback
a1. Remember there are three different types of inventory; materials, work in process, and finished goods.
a2. Prepare the March journal entry for the Papermaking Department for the conversion costs charged to production. If an amount box does not require an entry, leave it blank.
Work in Process-Papermaking Department | |||
Wages Payable | |||
Factory Overhead-Papermaking Department |
Feedback
a2. What types of costs are included in conversion costs? By adding these conversion costs are the units complete and ready for transfer?
a3. Prepare the March journal entry for the Papermaking Department for the completed production transferred to the Converting Department. If required, round your interim calculations to two decimal places and your final answer to the nearest dollar.
Work in Process-Converting Department | |||
Work in Process-Papermaking Department |
Feedback
a3. Remember that each department has a work in process account. Are these units 100% complete and ready to be sold or are they still in process?
b. Determine the Work in Process—Papermaking Department
March 31 balance. If required, round your interim calculations to
two decimal places and your final answer to the nearest
dollar.
$
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