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Chapter 18: Q29E (page 1016)

Hartley Company has a production process that involves three processes. Units move through the processes in this order: cutting, stamping, and then polishing. The company had the following transactions in November:

1. Cost of units completed in the Cutting Department, \(17,000

2. Cost of units completed in the Stamping Department, \)30,000

3. Cost of units completed in the Polishing Department, \(35,000

4. Sales on account, \)50,000

5. Cost of goods sold is 80% of sales

Prepare the journal entries for Hartley Company.

Short Answer

Expert verified

The journal entries to record the transfer of cost from one department to another, sales of the units, and the cost of goods sold are shown in step 2.

The cost of goods sold is $50,000.

Step by step solution

01

Step-by-Step Solution:Step 1: Manufacturing Process

The manufacturing process converts the raw material by applying the conversion cost into the finished product, and the company can sell that finished product in the market.

02

Journal entries to record the transactions

Date

Particulars

Debit ($)

Credit ($)

1.

Work-in-process inventory – Stamping department

17,000

Work-in-process inventory – Cutting dept.

17,000

2.

Work-in-process inventory-Polishing department

30,000

Work-in-process inventory-Stamping dept.

30,000

3.

Finished goods inventory

35,000

Work-in-process inventory-Polishing dept

35,00

4.

Account receivable

50,000

Sales revenue

50,000

5.

Cost of goods sold (80% of $50,000)

40,000

Finished goods inventory

40,000

03

Cost of goods sold

Costofgoodssold=Sales×80%=$50,000×80%=$40,000

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Most popular questions from this chapter

Brian’s Frozen Pizzas uses FIFO process costing. Selected production and cost data follow for April 2018.

Prepping department

Units to account for:

Beginning work-in-process, March 31

20,000

Started in April

45,000

Total units to account for

65,000

Units accounted for:

Completed and transferred out during April:

From beginning work-in-process inventory

20,000

Started and completed during April

30,000

Ending work-in-process, April 30

15,000

Total units accounted for

65,000

Requirements

1. Calculate the following:

a. On March 31, the Prepping Department beginning Work-in-Process Inventory was 75% complete for materials and 55% complete for conversion costs. This means that for the beginning inventory % of the materials and % of the conversion costs were added during April.

b. On April 30, the Prepping Department ending Work-in-Process Inventory was 60% complete for materials and 85% complete for conversion costs. This means that for the ending inventory % of the materials and % of the conversion costs were added during April.

2. Use the information in the table and the information in Requirement 1 to compute the equivalent units of production for direct materials and conversion costs for the Prepping Department.

Question: Identify each costing system characteristic as job order costing or process costing.

a. One Work-in-Process Inventory account

b. Production cost reports

c. Cost accumulated by process

d. Job cost sheets

e. Manufactures homogenous products through a series of uniform steps

f. Multiple Work-in-Process Inventory accounts

g. Costs transferred at end of period

h. Manufactures batches of unique products or provides specialized services

Question: What is a production cost report?

Happy Colors manufactures crayons in a three-step process: mixing, molding, and packaging. The Mixing Department combines the direct materials of paraffin wax and pigments. The heated mixture is pumped to the Molding Department, where it is poured into molds. After the molds cool, the crayons are removed from the molds and are transferred to the Packaging Department, where paper wrappers are added and the crayons are boxed.

In the Mixing Department, the direct materials are added at the beginning of the

process and the conversion costs are incurred evenly throughout the process. Work in process of the Mixing Department on April 1, 2018, consisted of 300 batches of crayons that were 30% of the way through the production process. The beginning balance in Work-in-Process Inventory—Mixing was \(27,800, which consisted of \)10,700 in direct materials costs and $17,100 in conversion costs. During April, 3,200 batches were started in production. The Mixing Department transferred 2,800 batches to the Molding Department in April, and 700 were still in process on April 30. This ending inventory was 80% of the way through the mixing process. Happy Colors uses FIFO process costing.

At April 30, before recording the transfer of costs from the Mixing Department

to the Molding Department, the Happy Colors general ledger included the following account:

Work-in-process inventory – Mixing

Balance, March 1

27,800

Direct materials

22,400

Direct labor

21,330

Manufacturing overhead

44,070

Requirements

1. Prepare a production cost report for the Mixing Department for April. Round

equivalent unit costs to four decimal places. Round all other costs to the nearest

dollar.

2. Journalize all transactions affecting the Mixing Department during April, including the entries that have already been posted. Assume the labor costs are accrued and not yet paid.

Question: Spring Fresh produces premium bottled water. Spring Fresh purchases artesian water, stores the water in large tanks, and then runs the water through two processes: filtration and bottling.

During February, the filtration process incurred the following costs in processing

200,000 liters:

Wages of workers operating filtration equipment

$19,950

Manufacturing overhead allocated to filtration

20,050

Water

110,000

Spring Fresh had no beginning Work-in-Process Inventory in the Filtration Department in February and uses the weighted-average method.

Requirements

1. Compute the February conversion costs in the Filtration Department.

2. The Filtration Department completely processed 200,000 liters in February. What was the filtration cost per liter?
See all solutions

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