B-20.06 Journal entries from cost of production data Vasquez Systems produces hi

Question

B-20.06 Journal entries from cost of production data Vasquez Systems produces high-quality table tops. Each table top is produced from a single large tree in a three-step process consisting of milling, sanding, and cutting. All raw material is introduced at the start of the milling process. The company uses a process costing system for all costs incurred throughout the production cycle.The following data were extracted from each department's cost of production report prepared for April: Milling Dept. The beginning balance of work in process was $275,000. During April, additional costs of $690,000 were incurred. The additional costs were attributable to direct materials (70%), direct labor (20%), and factory overhead (10%). The ending balance of work in process was $160,000. Sanding Dept. The beginning balance of work in process was $175,000. During April, additional costs of $400,000 were incurred. The additional costs were attributable to direct labor (70%) and factory overhead (306). The ending balance of work in process was $290,000. Cutting Dept. The beginning balance of work in process was $365,000. During April, additional costs of $150,000 were incurred. The additional costs were attributable to direct labor (60%) and factory overhead (40%). The ending balance of work in process was $210,000. Prepare summary journal entries to reflect costs incurred by each department during April, as well as the transfer of costs between departments and into finished goods.

Explanation / Answer

*A/c- Account

Notes. ($)

1. Opening Balance- 275000

Additional cost incurred- 690000

Ending balance in the Dept. - (160000)

Transferred to next dept. = 805000

2. Opening - 175000

Additional cost incurred- 400000

Transfer from previous dept. - 805000

Ending balance -. (290000)

Transferred to next dept. = 1090000

3. Opening- 365000

Additional cost incurred- 150000

Transfer from previous dept.- 1090000

Ending balance - (210000)

Transferred to Finished goods account= 1395000

Journal Entries (Vasquez Systems) Dr ($) Cr ($) 1. Mailling Dep. A/c Dr 690000 To Direct Material A/c* 483000 To Direct Labour A/c 138000 To Factory Overhead A/c 69000 2. Sanding Dep. A/c Dr 805000 To Milling Dep. A/c. (Note 1) 805000 3. Sanding Dep. A/c Dr 400000 To Direct Labour A/c 280000 To Factory Overhead A/c 120000 4. Cutting Dep. A/c Dr 1090000 To Sanding Dep. A/c. (Note 2) 1090000 5. Cutting Dep. A/c Dr 150000 To Direct Labour A/c 90000 To Factory Overhead A/c 60000 6. Finished Goods A/c Dr 1395000 To Cutting Dep. A/c. (Note 3) 1395000

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