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Homework answers / question archive / Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 [The following information applies to the questions displayed below
Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 [The following information applies to the questions displayed below.) 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 Ending InventoryInventory Work in process inventory- 243,500 160,500 Cutting Work in process inventory- 263,300 122,500 Stitching Finished goods inventory 60, 100 48, 250 The following additional information describes the company's production activities for May. $125,000 Direct materials Raw materials purchased on credit Direct materials used- Cutting Direct materials used- Stitching 26,750 0 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 25,600 102,400 187,000 Factory Overhead (Actual costs) Indirect materials used $75,600 Indirect labor used 59,000 Other overhead costs 67,000 Factory Overhead Rates Cutting (150% of direct) materials used Stitching (120% of direct labor Sales $1,056,000 used'
Problem 20-1A Part 1 Required: 1. Compute the amount of (a) production costs transferred from Cutting to Stitching, (b) production costs transferred from Stitching to finished goods, and (c) cost of goods sold. Work in Process (WIP) - Cutting Work in Process (WIP) - Stitching Finished Goods (FG)
Problem 20-1A Part 2 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, (i) goods transferred from Stitching to finished goods, (k) cost of goods sold, and (1) sales. View transaction list Journal entry worksheet Record purchase of raw materials. Note: Enter debits before credits. Date General Journal Debit Credit May 31 Record entry View general journal Clear entry
Required information Problem 20-1A Production cost flow and measurement; journal entries LO P1, P2, P3, P4 [The following information applies to the questions displayed below.) 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 Ending InventoryInventory Work in process inventory- 243,500 160,500 Cutting Work in process inventory- 263,300 122,500 Stitching Finished goods inventory 60, 100 48,250 The following additional information describes the company's production activities for May. $125,000 Direct materials Raw materials purchased on credit Direct materials used- Cutting Direct materials used- Stitching 26,750 0 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 25,600 102,400 187,000 Factory Overhead (Actual costs) Indirect materials used $75,600 Indirect labor used 59,000 Other overhead costs 67,000 Factory Overhead Rates Cutting (150% of direct) materials used' Stitching (120% of direct labor) used Sales $1,056,000 Problem 20-1A Part 2 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
Problem 20-1A Part 2 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, (i) goods transferred from Stitching to finished goods, (k) cost of goods sold, and (1) sales. View transaction list Journal entry worksheet
Answer (1) computation of production cost transfered from cutting unit to stiching unit
| Work in Process (WIP)- Cutting | |||
| particulars | amount | particulars | amount |
| To balance b/d | 243500 | ||
| To Raw material | 125000 | ||
| To Direct materials | 26750 |
By Work in process stiching(transfere) |
300475 |
| To Direct labour | 25600 | ||
|
To Factory overhead (150% of direct material) |
40125 | By balance c/d | 160500 |
| 460975 | 460975 |
computation of production cost transfered from stiching unit to finished goods account
| Work In Process (WIP) - Stiching | |||
| Particulars | amount | Particulars | amount |
| To balance b/d | 263300 | ||
| To WIP Cutting a/c (transfered) | 300475 | By Finished goods a/c(transfered ) | 666555 |
| To direct labour | 102400 | ||
| To Factory overhead(120% of dirct labour) | 122880 | By balance c/d | 122500 |
| 789055 | 789055 |
Computation of cost transfered from finished goods a/c to cost of goods sold
| Finished goods (FG) | |||
| PARTICULARS | AMOUNT | PARTICULARS | AMOUNT |
| To balance b/d | 60100 | ||
| To WIP Stiching a/c | 666555 | By cost of sales a/c | 678405 |
| By balance c/d | 48250 | ||
| 726655 | 726655 |
ANSWER (2) Journal entries
| DATE | GENERAL JOURNAL DEBIT CREDIT |
| a |
Raw material inventory account Dr. 125000 To cash a/c 125000(purchase of raw material ) |
| b |
Work in process cutting a/c Dr. 26750 To Raw material inventory A/c 26750 (direct material usage) |
| c |
Factory Overhead Account Dr. 75600 To Raw material inventory a/c 75600 (indirect material usage) |
| d |
Work in process cutting a/c Dr. 25600 Work in process stiching a/c Dr. 102400 To factory payroll a/c 128000 \(direct labour cost incurred) |
| e |
Factory overhead account Dr. 59000 To Factory payroll a/c 59000 (indirect labour cost incurred) |
| f |
Factory ovrhead account Dr. 187000 to cash account 187000 (payroll expense paid) |
| g |
factory overhead account Dr. 67000 To Other cost Eexpense account 67000 (other cost incurred) |
| h |
Work in process cutting account Dr. 40125 Work in process stiching account Dr. 122880 To Factory overhead account 163005 (factory overhead applied) |
| i |
Work in process stiching account Dr. 300475 To Work in process cutting a/c 300475 (cost of goods transferef from cutting unit to stiching unit) |
| j |
Finished goods a/c Dr. 666555 To Work in process stiching account 666555 (goods transfered to finished goods) |
| k |
cost of sale account Dr. 678405 To Finished Goods Account 678405 (cost of goods sold) |
| l |
Cash account Dr. 1056000 To Sales Account 1056000 (sale of goods) |
