ork Laffer Lumber produces bagged bark for use in landscaping. Production invove

Question

ork Laffer Lumber produces bagged bark for use in landscaping. Production invoves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October Direct materials used Direct labor used Predeternined overhead rate (based on direct labor) Goods trans ferred from bagging to finished goods 5 238,eee 5 45,8ee 140% s(2e8, see) The company's revenue for the month totaled $480,000 from credit sales, and its cost of goods sold for the month is $258,000 Prepare summary journal entries dated October 31 to record its October production activities for (T) direct materials usage, (2) direct labor incurred (3) overhead allocation. (4) goods transfer from production to finished goods, and (5) credit sales View transaction list Journal entry worksheet Record direct materials used in production. Note Enter debits before credts Od 31 Clear entry View general journal

Explanation / Answer

Solution: Sr. No. Date General Journal Debit Credit 1. Oct 31 Work in process inventory 230,000 Raw materials inventory 230,000 2. Oct 31 Work in process inventory 45,000 Factory payroll payable 45,000 3. Oct 31 Work in process inventory 63,000 Factory overhead 63,000 Working Notes: Factory overhead = Direct labor x predetermined Overhead rate Factory overhead = 45,000 x 140% = 63,000 4. Oct 31 Finished goods inventory 208,500 Work in process inventory 208,500 Notes: Goods transferred from bagging to finished goods is already given amount 208,500 5. Oct 31 Accounts receivable 480,000 Sales 480,000 6. Oct 31 Cost of goods sold 258,000 Finished goods inventory 258,000 Notes: Finished goods inventory what we transferred is 208500 is less than what we charged to cost of goods sold 258,000 as data already is given in question itself , so it must have inventory at the beginning of the period Please feel free to ask if anything about above solution in comment section of the question.

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