*Keep in mind, the table goes up to number 8. Cornerstone Exercise 11.5 (Algorit
ID: 2526563 • Letter: #
Question
*Keep in mind, the table goes up to number 8.
Cornerstone Exercise 11.5 (Algorithmic) Backflush Costing Hepworth Company has implemented a JIT system and is considering the use of backflush costing. Hepworth had the following transactions for the current fiscal year: 1. Purchased raw materials on account for $380,000 2. Placed all materials received into production. 3. Incurred actual direct labor costs of $57,000 4. Incurred actual overhead costs of $396,200 5. Applied conversion costs of $428,600. 6. Completed all work for the month. 7. Sold all completed work 8. Computed the difference between actual and applied costs. Required: Hide 1. Prepare the journal entries for traditional costing 1. 2. 3.Explanation / Answer
Solution:
Event
General Journal
Debit
Credit
1
Raw materials
$380,000
Accounts Payable
$380,000
2
Work in Process Inventory
$380,000
Raw materials
$380,000
3
Work in Process Inventory
$57,000
Wages Payable
$57,000
4
Manufacturing Overhead
$396,200
Accounts Payable
$396,200
5
Work in Process Inventory (Conversion cost 428,600 - Direct labor cost 57,000)
$371,600
Manufacturing Overhead (Applied Ovehreads to Production)
$371,600
6
Finished Goods Inventory
$808,600
Work In Process Inventory (380,000 + 57,000 + 371,600)
$808,600
7
Cost of Goods Sold
$808,600
Finished Goods Inventory
$808,600
8
Cost of Goods Sold
$24,600
Manufacturing Overhead (Under applied 396,200 - 371,600)
$24,600
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Event
General Journal
Debit
Credit
1
Raw materials
$380,000
Accounts Payable
$380,000
2
Work in Process Inventory
$380,000
Raw materials
$380,000
3
Work in Process Inventory
$57,000
Wages Payable
$57,000
4
Manufacturing Overhead
$396,200
Accounts Payable
$396,200
5
Work in Process Inventory (Conversion cost 428,600 - Direct labor cost 57,000)
$371,600
Manufacturing Overhead (Applied Ovehreads to Production)
$371,600
6
Finished Goods Inventory
$808,600
Work In Process Inventory (380,000 + 57,000 + 371,600)
$808,600
7
Cost of Goods Sold
$808,600
Finished Goods Inventory
$808,600
8
Cost of Goods Sold
$24,600
Manufacturing Overhead (Under applied 396,200 - 371,600)
$24,600
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