Zippo Co. manufacturers its products in a continuous process involving two depar

Question

Zippo Co. manufacturers its products in a continuous process involving two departments, Machining and Assembly. Prepare journal entries to record the following transactions related to production during June: (a) (b) Materials purchased on account, $200,000 Materials requisitioned by: Machining, $82,000 direct and $5,000 indirect materials; Assembly, $2,900 indirect materials (c) Direct labor used by Machining, $30,000; Assembly, $47,000 (d) Depreciation expenses: Machining, $6,500; Assembly, $2,300 (e Factory overhead applied: Machining, $8,700; Assembly, $12,200 (f Machining Department transferred S69,300 to Assembly Department; Assembly Department transferred $65,400 to finished goods Sold goods on account, $80,000; cost of goods sold, $60,000 (g)

Explanation / Answer

S.NO. ACCOUNTS TITLES AND EXPLANATIONS DEBIT IN $ CREDIT IN $ a. Raw material Inventory Dr. 200,000    Accounts payable 200,000 (For raw material purchased) b. Work in process Inventory-Machining Dr. 82,000 Manufacturing overheads Account Dr. 7,900    Raw material Inventory Account 87,900 (for raw material issued as direct and indirect material) c Work in process Inventory-Machining Dr. 30,000 Work in process Inventory-Assembly Dr. 47,000 Factory Wages (for wages incurred) d Manufacturing overheads Account Dr. 8,800     Accumulated Depreciation-Equipment machining 6500     Accumulated depreciation-Equip assembly 2,300 (for depreciation) e Work in process Inventory-Machining Dr. 8,700 Work in process Inventory-Assembly Dr. 12200      Mannufacturing Overheads Account 20900 (for overheads applied) f work in process-Assembly Dr. 69,300    Work in process -Machining 69,300 (for goods transferred from machining to Assembly) Finished Goods Inventory 65,400     Work in process-Assembly Account 65,400 (For transferring completed goods from next process) g Cost of Goods sold account Dr. 60,000     Finished Goods Inventory Account 60,000 (for cost of goods sold transferred from finished goods) Accounts receivable Dr. 80,000      Sales revenue 80,000 (for goods sold)

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