Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in t
ID: 2556269 • Letter: P
Question
Port Ormond Carpet Company manufactures carpets. Fiber is placed in process in the Spinning Department, where it is spun into yarn. The output of the Spinning Department is transferred to the Tufting Department, where carpet backing is added at the beginning of the process and the process is completed. On January 1, Port Ormond Carpet Company had the following inventories:
Departmental accounts are maintained for factory overhead, and both have zero balances on January 1. Manufacturing operations for January are summarized as follows:
Chart of Accounts
Journal
1. Journalize the entries to record the operations, using the dates provided with the summary of manufacturing operations. Refer to the Chart of Accounts for exact wording of account titles.
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JOURNAL
ACCOUNTING EQUATION
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Final Questions
2. Compute the January 31 balances of the inventory accounts.
3. Compute the January 31 balances of the factory overhead accounts.
Explanation / Answer
2)
Material : beginning +purchased -requistioned
= 17000+500000-470500
= 46500
work in process:
spinning = Beginning + cost incurred during the month -transfered to tufting
=35000+ [275000+185000+80000]-547000
= 28000
Tufting : 28500+[110000+98000+55000]-807200
= -515700 *** [mistakein question faming since amount transfered to finished goods is more than balance in work in process]
finished goods inventory =Beginning +transfered - cost of goods sold
= 62000+807200-795200
= 74000
3)Actual overhead :
spinning : 46000+18500+12500+2000=79000
Applied overhead spinning :80000
Balance of overapplied overhead =Actual -applied
= 79000-80000
= -1000
Tufting :
Actual :39500+9000+8500+1000=58000
applied : 55000
underapplied overhead =58000-55000= 3000
Balance in Factory overhead :
spinning = -1000
Tufting : 3000
Date Account Debit credit jan 1 Raw material inventory 500000 accounts payable 500000 jan 2 Work in process-spinning 275000 work in process-Tufting 110000 Factory overhead -spinning 46000 factory overhead -Tufting 39500 Raw material inventory 470500 jan31 Work in process -Spinning 185000 work in process-Tufting 98000 Factory overhead -spinning 18500 Factory overhead -tufting 9000 Factory labor 310500 Jan 31 Factory overhead -spinning 12500 Factory overhead -tufting 8500 accumulated depreciation 21000 Jan 31 Factory overhead -spinning 2000 Factory overhead -tufting 1000 prepaid insurance 3000 jjan 31 work in process -spinning 80000 workin process -Tufting 55000 Factory overhead -spinning 80000 Factory -tufting 55000 Jan 31 work in process-Tufting 547000 work in process -spinning 547000 jan 31 Finsihed goods inventory 807200 work in process -Tufting 807200 Jan 31 cost of goods sold 795200 Finsihed goods inventory 795200