PROBLEMS SET A P161A Fire Out Company manufactures its produ

PROBLEMS: SET A P16-1A Fire Out Company manufactures its product, Vitadrink, through two manufactur Journalize transactions. ing processes: Mixing and Packaging. All materials are entered at the beginning of each (LO 2), AP process. On October 1, 2017, inventories consisted of Raw Materials $26,000, Work in s $289,000. Process-Mixing $0, Work in Process-Packaging $250,000, and Finished Good The beginning inventory for Packaging consisted of 10,000 units that were 50% complete as to conversion costs and fully complete as to materials. During October, 50,000 units were started into production in the were completed. Mixing Department and the following transactions 1. Purchased $300,000 of raw materials on account. 2. Issued raw materials for production: Mixing $210,000 and Packaging $45,000. 3. Incurred labor costs of $278,900. 4. Used factory labor: Mixing $182,500 and Packaging $96,400 5. Incurred $810,000 of manufacturing overhead on account 6. Applied manufacturing overhead on the basis of $23 per machine hour. Machine hours were 28,000 in Mixing and 6,000 in Packaging. 7. Transferred 45,000 units from Mixing to Packaging at a cost of $979,000. 8. Transferred 53,000 units from Packaging to Finished Goods at a cost of $1,315,000. 9. Sold goods costing $1,604,000 for $2,500,000 on account. Instructions Journalize the October transactions.

Solution

Transaction General Journal Debit Credit 1 Raw materials 300000 Accounts payable 300000 (To record materials purchased on account) 2 Work in process-Mixing 210000 Work in process-Packaging 45000 Raw materials (To record materials issued to production) 3 Wages expense 278900 Wages payable 278900 (To record labor costs incurred) 4 Work in process-Mixing 182500 Work in process-Packaging 96400 Wages expense 278900 (To record direct labor costs) 5 Manufacturing overhead 810000 Accounts payable 810000 (To record manufacturing overheads incurred) 6 Work in process-Mixing (28000 x $23) 644000 Work in process-Packaging (6000 x $23) 138000 Manufacturing overhead 782000 (To record manufacturing overheads applied) 7 Work in process-Packaging 979000 Work in process-Mixing 979000 (To record units transferred from Mixing to Packaging) 8 Finished goods 1315000 Work in process-Packaging 1315000 (To record units transferred from Packaging to Finished goods) 9 Accounts receivable 2500000 Sales revenue 2500000 (To record sales on account) Cost of goods sold 1604000 Finished goods 1604000 (To record the cost of goods sold)