Shamrock Industries uses process costing. All of the company\'s manufacturing ac

Question

Shamrock Industries uses process costing. All of the company's manufacturing activities take place in a single processing department. The following information was available for the month of June.

The amounts of work in process at the beginning and end of the month were immaterial and assigned no dollar value. During June, 20,000 units were completed, of which 16,000 were sold on account at $20 per unit.

a. Prepare a journal entry to summarize the total manufacturing costs applied to production in June.

b. Prepare the journal entry to transfer completed units from work in process to the finished goods warehouse in June.

c. Prepare the journal entries to record the sale of 16,000 units manufactured during the period and the related cost of goods sold.

Direct materials $ 90,000 Direct labor 30,000 Manufacturing overhead applied 40,000 Total costs to account for in June $ 160,000

Explanation / Answer

a) Journal entry to summarize the total manufacturing costs applied to production in June:

Work-in-Progress Dr. $ 160000

To Raw Material Inventory $ 90000

To Wages Payable $ 30000

To Manufacturing Overhead $ 40000

b) Journal entry to transfer completed units from work in process to the finished goods warehouse in June:

Finished Goods Dr. $ 160000

   To Work-in-Progress $ 160000

{Completed units * Cost of Production per unit = 20000 * 8 i.e.(160000/20000)}

c)  Journal entries to record the sale of 16,000 units manufactured during the period and the related cost of goods sold:

( Units Sold * Cost of Production per unit = 16000 * 8)

To Finished Goods $ 128000

To Cost of Sales $ 128000

To Profit on Sales $ 192000

To Sales $ 320000

Thank You

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