Prime Products uses a JIT management system to manufacture trading pins. The standard cost per pin is \(2 for direct materials and \)3 for conversion costs. Last month, Prime recorded the following data:

Number of pins completed 4,100 pins

Number of pins sold (on account at \(7 each) 3,700 pins

Raw material purchases (on account) \) 7,000

Conversion costs $ 14,500

Use JIT costing to prepare journal entries for the month, including the entry to adjust the Conversion Costs account.

Date

Description

Debit

Credit

Trans. 1

Raw and In-Process Inventory

$ 7,000

Accounts Payable

$ 7,000

Being inventories purchased on credit

Trans. 2

Conversion Costs

14,500

Labor and overheads cost payable

14,500

Being conversion cost incurred

Trans. 3

Finished goods inventory

20,500

Raw and In-process inventory

8,200

Conversion Costs

12,300

Being completed 4,100 goods transferred to the finished inventory account at standard cost

Date

Description

Debit

Credit

Trans. 4

Accounts Receivables

$ 25,900

Sales Revenue

$ 25,900

Being goods sold on credit

Trans. 5

Cost of goods sold

18,500

Finished goods inventory

18,500

Being cost of goods sold for sold units at standard cost

Date

Description

Debit

Credit

Trans. 6

Cost of goods sold

$ 2,200

Conversion cost

$ 2,200

Being under-allocated conversion cost transferred to cost of goods sold account