Laffer Lumber produces bagged bark for use in landscaping. Production involves p

Question

Laffer Lumber produces bagged bark for use in landscaping. Production involves packaging bark chips in plastic bags in a bagging department. The following information describes production operations for October. Bagging Department Direct materials used $ 232,000 Direct labor used $ 36,000 Predetermined overhead rate (based on direct labor) 120 % Goods transferred from bagging to finished goods $ (209,500 ) The company's revenue for the month totaled $430,000 from credit sales, and its cost of goods sold for the month is $242,000. Prepare summary journal entries dated October 31 to record its October production activities for (1) direct materials usage, (2) direct labor incurred (3) overhead allocation, (4) goods transfer from production to finished goods, and (5) credit sales.

FOR Oct. 31 for all -

1. Record direct materials used in production.

2.Record direct labor used in production, but not yet paid.

3.Record overhead applied to production.

4.Record the transfer of goods from production to finished goods.

5.Record the sale of goods on account.

6.Record the cost of goods sold.

Note: Enter debits before credits.

Explanation / Answer

Date Account Titles and Explanation Debit Credit 1 Oct. 31 Work in process inventory 232000 Materials inventory 232000 (To record direct materials used in production) 2 Oct. 31 Work in process inventory 36000 Factory payroll payable 36000 (To record direct labor used in production) 3 Oct. 31 Work in process inventory (120% x $36000) 43200 Factory overhead 43200 (To record overhead applied to production) 4 Oct. 31 Finished goods inventory 209500 Work in process inventory 209500 (To record transfer of goods from production) 5 Oct. 31 Accounts receivable 430000 Sales revenue 430000 (To record sale of goods on account) 6 Oct. 31 Cost of goods sold 242000 Finished goods inventory 242000 (To record the cost of goods sold)

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