Two Departments, Journal Entries with Supporting Calculations—Weighted Average M
ID: 2521093 • Letter: T
Question
Two Departments, Journal Entries with Supporting Calculations—Weighted Average Method
Parker Laboratories, Inc., produces one of its products in two successive departments. All materials are added at the beginning of the process in Department 1; no materials are used in Department 2. Conversion costs are incurred evenly in both departments. Parker uses the weighted average method for process costing. August 1, 2016, inventory account balances are as follows:
During August, the following transactions occurred:
1. Purchased material on account, $116,000.
2. Placed 16,000 units of material at $8 per unit into process in Department 1.
3. Distributed total payroll costs: $167,540 of direct labor to Department 1, $84,600 of direct labor to Department 2, and $38,200 of indirect labor to Manufacturing Overhead.
4. Incurred other actual manufacturing overhead costs, $42,400. (Credit Other Accounts.)
5. Applied overhead to the two processing departments: Department 1, $42,560, Department 2, $35,800
6. Transferred 20,000 completed units from Department 1 to Department 2. The 2,000 units remaining in Department 1 were 30% completed with respect to conversion costs.
7. Transferred 15,000 completed units from Department 2 to Finished Goods Inventory. The 9,000 units remaining in Department 2 were 40% completed with respect to conversion costs.
8. Sold 13,000 units on account at $48 per unit. Parker uses weighted average inventory costing for finished goods inventory.
a. Record the August transactions in general journal form for Department 1 and Department 2.
Hint: Complete the product cost reports for Departments 1 and 2 before entering journal entries for transactions 6, 7, and 8.
To record sales.
To record cost of goods sold.
b. Prepare a product cost report (with its supporting calculations) for Department 1.
Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.
c. Prepare a product cost report (with its supporting calculations) for Department 2.
Round average cost per equivalent unit to four decimal places. Use rounded answers for subsequent calculations. Round other answers to the nearest whole number.
d. Determine the balances remaining in the Materials Inventory account, in each work in process account, and in the Finished Goods Inventory account.
Materials inventory $30,000 Work in process - Department 1 (6,000 units, 25% complete) Direct materials 23,000 Conversion costs 37,500 Work in process - Department 2 (4,000 units, 35% complete) 82,000 Finished goods inventory (4,000 units @ $12.50) 100,000Explanation / Answer
Answer General Journal Department -1 Date Account Debit Credit 01/02 Work in process 84000 Inventory 84000 01/03 Work in process 108000 Direct labor 108000 01/05 Work in process 88000 Overhead 88000 Department-2 290551.18 Work in process 290551.18 General Journal Department -2 Date Account Debit Credit 01/03 Work in process 62700 Direct labor 62700 01/05 Work in process 43900 Overhead 43900 Work in process 290551.18 Depatment 1 290551.18 Finished goods inventory 409788.70 Work in process 409788.70 Product Cost Report Department - 1 Material Conversion Unit beginning in process 3000 900 900 Unt started during the month 24000 24000 24000 Total 27000 24900 24900 Units Completed and transferred out Units completed and trf to dep 2 25000 25000 25000 Units in ending WIP 2000 400 400 Total 27000 25400 25400 Cost to be accounted for Material Conversion Total Cost in beginng WIP 4560 10640 15200 Cost incurred during month 84000 196000 280000 Total cost accounted for 88560 206640 295200 Total units 25400 25400 Cost per equivalent unit 3.49 8.14 11.62 Cost assigent to Material Conversion Total Units completed and trf to dep 2 87165.35 203385.83 290551.18 Units in ending WIP 1394.65 3254.17 4648.82 Total 88560.00 206640.00 295200.00 Product Cost Report Department - 2 Material Conversion Unit beginning in process 4000 1600 1600 Unt started during the month 25000 25000 25000 Total 29000 26600 26600 Units Completed and transferred out Units completed and trf 26000 26000 26000 Units in ending WIP 3000 2250 2250 Total 29000 28250 28250 Cost to be accounted for Cost in beginng WIP 48100.00 Cost incurred during month 397151.18 Total cost accounted for 445251.18 Total units 28250 Cost per equivalent unit 15.76 Cost assigent to total cost Units completed and trf to finished WIP 409788.70 Units in ending WIP 35462.48 Total 445251.18 Answer Inventory In hand amount Raw material 30000 Purchased 90000 issue to department -1 84000 Inventory In hand 36000 Work in process in depatment -1 Inventory In hand 4648.82 Work in process in depatment -2 Inventory In hand 35462.48 Finished goods inventory Beginning 32000.00 transfer from department -2 409788.70 Sold 315563.36 Inventory In hand 126225.34
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