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. Direct materials used Direct labor used Predetermined overhead rate (based on direct labor) Goods transferred from bagging to finished goods Bagging Department $ 238,000 $ 39,000 120% $(204,000) The company's revenue for the month totaled $480,000 from credit sales, and its cost of goods sold for the month is $254,000. 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. View transaction list Journal entry worksheet Record direct materials used in production. Note: Enter debits before credits. Date General Journal Debit Credit Oct 31 LO

Explanation / Answer

Journal entry :

No Account and explanation debit credit a Work in process 238000 Raw material 238000 (To record raw material used) b Work in process 39000 Wages payable 39000 (To record direct labour) c Work in process (39000*120%) 46800 Manufacturing overhead 46800 (To record overhead allocation) d Finished goods 204000   Work in process 204000 (To record goods transferred to finished goods) e Account receivable 480000 Sales 480000 (To record credit Sales) Cost of goods sold 254000 Finished goods 254000 (To record cost of goods sold)

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