Exercise 17-4 Schrager Company has two production departments: Cutting and Assem

Question

Exercise 17-4

Schrager Company has two production departments: Cutting and Assembly. July 1 inventories are Raw Materials $4,700, Work in Process—Cutting $3,600, Work in Process—Assembly $10,800, and Finished Goods $32,300. During July, the following transactions occurred.

1. Purchased $64,600 of raw materials on account. 2. Incurred $61,800 of factory labor. (Credit Wages Payable.) 3. Incurred $71,600 of manufacturing overhead; $41,200 was paid and the remainder is unpaid. 4. Requisitioned materials for Cutting $17,300 and Assembly $9,600. 5. Used factory labor for Cutting $34,900 and Assembly $26,900. 6. Applied overhead at the rate of $20 per machine hour. Machine hours were Cutting 1,740 and Assembly 1,760. 7. Transferred goods costing $68,840 from the Cutting Department to the Assembly Department. 8. Transferred goods costing $135,300 from Assembly to Finished Goods. 9. Sold goods costing $151,700 for $202,800 on account.

Explanation / Answer

Date Entry Debit Credit Raw materials a/c Dr $64,600.00 To Accounts payable a/c Cr $64,600.00 (Being raw materials purchased on account) Factory labour wages expense a/c Dr $61,800.00 To wages Payable a/c Cr $61,800.00 (Being factory wages incurred and payable recorded in the books) Manufacturing overhead expense a/c Dr $71,600.00 To Cash a/c Cr $41,200.00 To manufacturing overhead payable a/c Cr $30,400.00 (Being manufacturing overhead partly paid and the balance recorded as payable) Work in process -Cutting department a/c Dr $17,300.00 Work in process -Assembly department a/c Dr $9,600.00 To Raw materials a/c Cr $26,900.00 (Being raw materials issued to the production departments) Work in process -Cutting department a/c Dr $34,900.00 Work in process -Assembly department a/c Dr $26,900.00 To Factory labour wages expense a/c   Cr $61,800.00 (Being factory labour incurred for cutting and assembly department) Work in process-Cutting department a/c Dr $34,800.00 Work in process-Assembly department a/ Cr $35,200.00 To manufacturing overhead a/c Cr $70,000.00 (Being manufacturing overhead applied to the respective departments based on based on machine hours) Work in process - Assembly department a/c Dr $68,840.00 To Work in process- Cutting department a/c Cr $68,840.00 (Being work in process of cutting deparmtne transferred to assembly deparmtnet) Finished goods a/c Dr $135,300.00 To Work in process - Assembly department a/c Cr $135,300.00 (Being completed goods transferred department to finished goods) Cost of goods soid a/c Dr $151,700.00 To Finished goods a/c Cr $151,700.00 (Being finished goods sold transferred to cost of goods sold) Accounts receivable a/c Dr $202,800.00 To Sales   a/c Cr $202,800.00 (Being sales on account recorded)

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