[The following information applies to the questions displayed below.J Edison Com

Question

[The following information applies to the questions displayed below.J Edison Company manufactures wool blankets and accounts for product costs using process costing. The following information is available regarding its May inventories. Raw materials inventory Goods in process inventory Finished goods inventory Beginning Inventory $57,000 404,000 631,000 Ending Inventory $40,000 542,000 498,001 The following additional information describes the company's production activities for May Raw materials purchases (on credit) Factory payroll cost (paid in cash) Other overhead cost (Other Accounts credited) Materials used 290,000 2,055,000 92,000 Direct Indirect $166,000 76,000 Labor used Direct Indirect $1,235,000 820,000 125% Overhead rate as a percent of direct labor Sales (on credit) $4,000,000 The predetermined overhead rate was computed at the beginning of the year as 125% of direct labor cost.

Explanation / Answer

Work in process inventory opening balance 404,000 Cost of goods trfd 2,806,750 Direct materials 166,000 to finished goods direct labor 1,235,000 overhead applied 1543750 Ending inventory 542,000 Finished goods inventory beginning balance 631,000 Cost of goods sold 2,939,749 WIP 2,806,750 Ending inventory 498,001 1-a) Cost of products transferred 2,806,750 1-b) Cost of goods sold 2,939,749 2-a) Date General Journal Debit Credit 31-May Raw materials inventory 290,000 accounts payable 290,000 2-b) Date General Journal Debit Credit 31-May Work in process inventory 166,000 Raw materials inventory 166,000 2-c) Date General Journal Debit Credit 31-May factory overhead 76,000 Raw materials inventory 76,000 2-d) Date General Journal Debit Credit 31-May Factory payroll 2,055,000 cash 2,055,000 2-e) Date General Journal Debit Credit 31-May Work in process inventory 1,235,000 Factory payroll 1,235,000 2-f) Date General Journal Debit Credit 31-May Factory overhead 820,000 Factory payroll 820,000 2-g) Date General Journal Debit Credit 31-May Factory overhead 92,000 other accounts 92,000 2-h) Date General Journal Debit Credit 31-May Work in process inventory 1543750 Factory overhead 1543750 2-i) Date General Journal Debit Credit 31-May Finished goods 2,806,750 Work in process inventory 2,806,750 2-j) Date General Journal Debit Credit 31-May Accounts recievable 4,000,000 sales 4,000,000 Cost of goods sold 2,939,749 finished goods inventory 2,939,749

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