A firm produces its products by a continuous process involving three production

Question

A firm produces its products by a continuous process involving three production departments, 1 through 3. Present entries to record the following selected transactions related to production during August:

a. Materials purchased on account, $120,000.

b. Material requisitioned for use in Department 1, $125,700, of which $124,200 entered directly into the product. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

c. Labor cost incurred in Department 1, $195,400, of which $174,000 was used directly in the manufacture of the product. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

d. Factory overhead costs for Department 1 incurred on account, $54,700.

e. Depreciation on machinery in Department 1, $29,200.

f. Expiration of prepaid insurance chargeable to Department 1, $7,000.

g. Factory overhead applied to production, $106,300.

h. Output of Department 1 transferred to Department 2, $362,700.

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a. Materials purchased on account, $120,000.

Correct 2 of Item 1 Correct 3 of Item 1 Correct 4 of Item 1 Correct 5 of Item 1

Explanation / Answer

Hi,

Please find the entries as follows:

a)

Raw Materials Inventory Dr.            120000

AccountsPayable Cr.                                                120000

b)

Work In Process - Department1   Dr.           125700

Raw Materials Inventory      Cr.                                      124200

ManufacturingOverhead       Cr.                                      1500

c)
Work In Process - Department1 Dr.              195400
Raw MaterialsInventory    Cr.                                          174000          

Manufacturing Overhead     Cr.                                   21400

d)
Work InProcess - Department1     Dr.         54700

Manufacturing Overhead       Cr.                                      54700

e)
Work InProcess - Department1   Dr.            29200

Manufacturing Overhead   Cr.                                          29200

f)
Work InProcess - Department1 Dr.              7000

Manufacturing Overhead Cr.                                          7000

g)
Work InProcess - Department1    Dr.           106300

Manufacturing Overhead Cr.                                            106300

h)
Work InProcess - Department2               362700

WorkIn Process - Department1                                    362700

Thanks.

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