Homework answers / question archive / Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows

Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows

Business

Share With

Potter Company has installed a JIT purchasing and manufacturing system and is using backflush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions: Raw materials purchased $244,000 Direct labor cost 42,000 Overhead cost 210,500 Conversion cost applied 273,000 *$42,000 labor plus $231,000 overhead. There were no beginning or ending inventories. All goods produced were sold with a 50 percent markup. Any variance is closed to cost of Goods Sold. (Variances are recognized monthly.) Required: Prepare the journal entries for the month of June using backflush costing, assuming that Potter uses the sale of goods as the second trigger point instead of the completion of goods. For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare your entries in the following order: (a) purchase of raw materials, (b) incurrence of direct labor and overhead costs, (c) cost of sales, (d) sales revenue, and (e) recognition of the variance between applied and actual production costs. "e b. I III III u I 011 11 c. d. e. Accounts Payable Accounts Receivable Conversion Cost Control Cost of Goods Sold Raw Materials and In Process Inventory Sales Revenue Wages Payable Accounts Payable Accounts Receivable Conversion Cost Control Cost of Goods Sold Raw Materials and In Process Inventory Sales Revenue Accounts Payable Cash Cost of Goods Sold Finished Goods Inventory Raw Materials and In Process Inventory Accounts Payable Cash Conversion Cost Control Cost of Goods Sold Finished Goods Inventory