Entries for Process Cost System Preston Grover Soap Company

Entries for Process Cost System Preston & Grover Soap Company manufactures powdered detergent. Phosphate is placed in process in the Making Department, where it is turned into granulars. The output of Making is transferred to the Packing Department, where packaging is added at the beginning of the process. On July 1, Preston & Grover Soap Company had the following inventories: Finished Goods $4,920 Work in Process—Making 1,910 Work in Process—Packing 2,490 Materials 1,080 Departmental accounts are maintained for factory overhead, which both have zero balances on July 1. Manufacturing operations for July are summarized as follows: a. Materials purchased on account $61,280 b. Materials requisitioned for use Phosphate—Making Department $40,480 Packaging—Packing Department 14,080 Indirect materials—Making Department 1,580 Indirect materials—Packing Department 570 c. Labor used Direct labor—Making Department $28,920 Direct labor—Packing Department 19,520 Indirect labor—Making Department 5,600 Indirect labor—Packing Department 10,040 d. Depreciation charged on fixed assets Making Department $5,280 Packing Department 4,360 e. Expired prepaid factory insurance Making Department $1,000 Packing Department 400 f. Applied factory overhead Making Department $13,800 Packing Department 15,250 g. Production costs transferred from Making Department to Packing Department $83,440 h. Production costs transferred from Packing Department to Finished Goods $131,320 i. Cost of goods sold during the period $131,800 Required: 1. Journalize the entries to record the operations, identifying each entry by letter. For a compound transaction, if an amount box does not require an entry, leave it blank.

Solution

Item Account Debit Credit a. Materials 61,280 Accounts payable 61,280 b. work in process-Making Deptt 40,480 work in process-pcking Deptt 14,080 Factory overhead -making Deptt 1,580 Factory overhead -packing Deptt 570 Materials 56,710 c. work in process-Making Deptt 28,920 work in process-pcking Deptt 19,520 Factory overhead -making Deptt 5,600 Factory overhead -packing Deptt 10,040 Wages payable 64,080 d. Factory overhead -making Deptt 5,280 Factory overhead -packing Deptt 4,360 Accumulated Depreciation 9,640 e Factory overhead -making Deptt 1,000 Factory overhead -packing Deptt 400 prepaid insurance 1,400 f. work in process-Making Deptt 13,800 work in process-pcking Deptt 15,250 Factory overhead -making Deptt 13,800 Factory overhead -packing Deptt 15,250 g. work in process-packing department 83,440 work in process-making department 83,440 h. finished goods 131,320 work in process-packing department 131,320 i. cost of goods sold 131,800 finished goods 131,800