Question

Sierra Company manufactures soccer balls in two sequential processes: Cutting and Stitching. All direct materials enter production at the beginning of the Cutting process. The following information is available regarding its May inventories:

	Beginning Inventory			Ending Inventory
Work in process inventory—Cutting		53,500			65,500
Work in process inventory—Stitching		73,300			63,600
Finished goods inventory		22,100			10,250

The following additional information describes the company's production activities for May.

Direct materials
Raw materials purchased on credit	$	30,000
Direct materials used—Cutting		22,000
Direct materials used—Stitching		0

Direct labor
Direct labor—Cutting	$	16,100
Direct labor—Stitching		64,400
Total factory payroll paid (in cash)		135,700

Factory Overhead (Actual costs)
Indirect materials used	$	7,200
Indirect labor used		55,200
Other overhead costs		48,000

Factory Overhead Rates
Cutting	(150% of direct materials used			)
Stitching	(120% of direct labor used			)
Sales	$296,000

rev: 01_28_2020_QC_CS-197408

2. Prepare summary journal entries dated May 31 to record the following production activities during May: (a) raw materials purchases, (b) direct materials usage, (c) indirect materials usage, (d) direct labor costs incurred, (e) indirect labor costs incurred, (f) payment of factory payroll, (g) other overhead costs, (credit Other Accounts), (h) overhead applied, (i) goods transferred from Cutting to Stitching, (j) goods transferred from Stitching to finished goods, (k) cost of goods sold, and (l) sales.

Answer 1

	Account Titles	Debit	Credit
a	Raw Material Inventory	$         30,000
	Accounts Payable		$          30,000
b	Work in Process - Cutting	$         22,000
	Raw Material Inventory		$          22,000
c	Factory Overhead	$         39,600
	Raw Material Inventory		$          39,600
d	Work in Process - Cutting	$         16,100
	Work in Process - Stitching	$         64,400
	Wages Payable		$          80,500
e	Factory Overhead	$         55,200
	Wages Payable		$          55,200
f	Wages Payable	$       135,700
	Cash		$       135,700
g	Factory Overhead	$         48,000
	Other Accounts		$          48,000
h	Work in Process - Cutting	$         33,000
	Work in Process - Stitching	$         77,280
	Factory Overhead		$       110,280
i	Work in Process - Stitching	$         59,100
	Work in Process - Cutting		$          59,100
j	Finished Goods Inventory	$       210,480
	Work in Process - Stitching		$       210,480
k	Cost of Goods Sold	$       222,330
	Finished Goods Inventory		$       222,330
l	Accounts Receivable	$       296,000
	Sales Revenue		$       296,000

Cutting Department
Direct Material used in production	$         22,000
Direct Labor	$         16,100
Manufacturing Overhead (Cutting)	$         33,000
Total Manufacturing Costs		$          71,100
Add: Beginning Work in Process Inventory		$          53,500
		$       124,600
Deduct: Ending Work in Process Inventory		$          65,500
Cost of Goods Manufactured		$          59,100
Stitching Department
Transferred from Cutting Department	$         59,100
Direct Labor	$         64,400
Manufacturing Overhead (Stitching)	$         77,280
Total Manufacturing Costs		$       200,780
Add: Beginning Work in Process Inventory		$          73,300
		$       274,080
Deduct: Ending Work in Process Inventory		$          63,600
Cost of Goods Manufactured		$       210,480
Cost of Goods Sold
Cost of Goods Manufactured	$       210,480
Add : Beginning Inventory	$         22,100
Cost of Goods Available for Sale	$       232,580
Less : Ending Inventory	$         10,250
Cost of Goods Sold	$       222,330