Lubricants, Inc., produces a special kind of grease that is widely used by race
ID: 2422252 • Letter: L
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: The following incomplete Work in Process account is available for the Refining Department for March:
Work in Process—Refining Department
March 1 balance 33,100 Completed and transferred to Blending ?
Materials 145,600
Direct labor 69,200
Overhead 480,000
March 31 balance ?
The March 1 work in process inventory in the Refining Department consists of the following elements: materials, $7,800; direct labor, $3,700; and overhead, $21,600. Costs incurred during March in the Blending Department were: materials used, $46,000; direct labor, $16,600; and overhead cost applied to production, $106,000.
Required:
1. Prepare journal entries to record the costs incurred in both the Refining Department and Blending Department during March. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
a. Raw materials were issued for use in production.
b. Direct labor costs were incurred.
c. Manufacturing overhead costs for the entire factory were incurred, $706,000. (Credit Accounts Payable.)
d. Manufacturing overhead cost 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, $780,000.
g. Completed units were sold on account, $1,320,000. The Cost of Goods Sold was $620,000.
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 account is given on the prior page.)
After posting the entries to the T-accounts, find the ending balance in the inventory accounts and the manufacturing overhead account.
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 account is given on the prior page.)
Explanation / Answer
Part 1)
The journal entries are as follows:
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Part 2)
The T-Accounts and calculation of ending balance are given below:
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Ending Balances
Inventory Accounts:
Raw Material = $23,000
Work in Process - Refining = $95,900
Work in Process - Blending = $72,600
Finished Goods = $187,000
Manufacturing Overhead = $120,000
Account Titles Debit Credit a) Work in Process-Refining Department 145,600 Work in Process-Blending Department 46,000 Raw Materials 191,600 b) Work in Process-Refining Department 69,200 Work in Process-Blending Department 16,600 Salaries and Wages Payable 85,800 c) Manufacturing Overhead 706,000 Accounts Payable 706,000 d) Work in Process-Refining Department 480,000 Manufacturing Overhead 480,000 Work in Process-Blending Department 106,000 Manufacturing Overhead 106,000 e) Work in Process-Blending Department 632,000 Work in Process-Refining Department 632,000 f) Finished Goods 780,000 Work in Process-Blending Department 780,000 g) Accounts Receivable 1,320,000 Sales 1,320,000 Cost of Goods Sold 620,000 Finished Goods 620,000Related Questions
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