Pizang Corporation uses process costing. A number of transactions that occurred
ID: 2423981 • Letter: P
Question
Pizang Corporation uses process costing. A number of transactions that occurred in June are listed below. (1) Raw materials that cost $41,700 are withdrawn from the storeroom for use in the Mixing Department. All of these raw materials are classified as direct materials. (2) Direct labor costs of $47,700 are incurred, but not yet paid, in the Mixing Department. (3) Manufacturing overhead/Conversion costs of $56,900 is applied in the Mixing Department using the department's predetermined overhead rate. (4) Units with a carrying cost of $128,300 finish processing in the Mixing Department and are transferred to the Drying Department for further processing. (5) Units with a carrying cost of $133,800 finish processing in the Drying Department, the final step in the production process, and are transferred to the finished goods warehouse. (6) Finished goods with a carrying cost of $129,200 are sold. Required:
Prepare journal entries for each of the transactions listed above assuming the company uses a manufacturing overhead account.
Explanation / Answer
1. WIP Inventory - Mixing 41,700
To Rawmaterial Inventory 41,700
2. WIP Inventory - Mixing 47,700
To Direct labour 47,700
3. WIP Inventory - Mixing 56,900
To Manufacturing overheads 56,900
4. WIP Inventory -Dying 128,300
To WIP Inventory - Mixing 128,300
5. Finished goods inventory 133,800
To WIP Inventory - Dying 133,800
6.Cost of goods sold 129,200
To Finished goods inventory 129,200