Lubricants, Inc. produces a special kind of grease that is widely used by race c

Question

Lubricants, Inc. produces a special kind of grease that is widely used by race car drivers. The grease is produced in two processing departments-Refining and Blending. Raw materials are introduced at various points in the Refining Department The following incomplete Work in Process account is available for the Refining Department for March: Hork in Process-Refining Department March 1 balance 31,800 Completed and transferred to Blending Materials Direct labor Overhead March 31 balance 146, 600 82,200 The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $8,300, direct labor $3,500; and overhead, $20,000 Costs incurred during March in the Blending Department were: materials used, $44,000; direct labor, $16,600: and overhead cost applied to production, $98,000. Required: 1. Prepare journal entries to record the costs incurred in botrkthe Refining Department and Blending Department during March. Key your entries to the items (a) through (g) below. a. Raw materials used in production. b. Direct labor costs incurred. c. Manufacturing overhead costs incurred for the entire factory, $696,000. (Credit Accounts Payable.) d. Manufacturing overhead was applied to production using a predetermined overhead rate. e. Units that were complete with respect to processing in the Refining Department were transferred to the Blending Department $632,000 f. Units that were complete with respect to processing in the Blending Department were transferred to Finished Goods, $730,000. g. Completed units were sold on account, $1,320,000. The Cost of Goods Sold was $600,000. 2. Post the journal entries from (1) above to T-accounts. The following account balances existed at the beginning of March. (The beginning balance in the Refining Department's Work in Process is given in the T-account shown above)

Explanation / Answer

Solution 1:

Solution 2:

Journal Entries - Lubricants Inc. Event Particulars Debit Credit a1 Work In Process - Refining Department Dr $146,600.00               To Raw Materials $146,600.00 (Being raw material used in production) a2 Work In Process - Blending Department Dr $44,000.00               To Raw Materials $44,000.00 (Being raw material used in production) b1 Work In Process - Refining Department Dr $82,200.00               To Cash $82,200.00 (To record direct labor cost incurred) b2 Work In Process - Blending Department Dr $16,600.00               To Cash $16,600.00 (To record direct labor cost incurred) c Manufacturing overhead Dr $696,000.00               To Accounts payable $696,000.00 (To record manufacturing overhead incurred) d1 Work In Process - Refining Department Dr $477,000.00               To Manufacturing overhead $477,000.00 (To record manufacturing overhead applied) d2 Work In Process - Blending Department Dr $98,000.00               To Manufacturing overhead $98,000.00 (To record manufacturing overhead applied) e Work In Process - Blending Department Dr $632,000.00               To Work In Process - Refining Department $632,000.00 (Being goods completed transferred to blending from refining) f Finished goods inventory Dr $730,000.00               To Work In Process - Blending Department $730,000.00 (Being goods completed transferred to finished goods) g1 Accounts receivables Dr $1,320,000.00               To Sales Revenue $1,320,000.00 (To record sales revenue) g2 Cost of goods sold Dr $600,000.00               To Finished goods inventory $600,000.00 (To record COGS)

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