Answer:
1. Journal Entries:
A. Debit Materials $500,000
Credit Accounts payable $500,000
To record the purchase of materials on account.
B. Debit Work-in-Process - Spinning $275,000
Credit Materials $275,000
To record the materials requisitioned.
B. Debit Work-in-Process -Tufting $110,000
Credit Materials $110,000
To record carpet backing
B. Debit Overhead - Spinning $46,000
Debit Overhead - Tufting $39,500
Credit Materials $85,500
To record indirect materials used.
C. Debit Work-in-Process - Spinning $185,000
Debit Work-in-Process - Tufting $98,000
Credit Factory labor $283,000
To record direct labor costs.
C. Debit Overhead - Spinning $18,500
Debit Overhead - Tufting $9,000
Credit Factory labor $27,500
To record indirect labor costs.
D. Debit Overhead - Spinning $12,500
Debit Overhead - Tufting $8,500
Credit Factory Depreciation $21,000
To record depreciation costs.
E. Debit Overhead - Spinning $2,000
Debit Overhead - Tufting $1,000
Credit Factory Insurance $3,000
To record insurance costs.
F. Debit Work-in-Process - Spinning $80,000
Debit Work-in-Process - Tufting $55,000
Credit Factory Overhead $135,000
To record overhead costs applied.
G. Debit Work-in-Process - Tufting $547,000
Credit Work-in-Process - Spinning $547,000
To record the transfer to Tufting department.
H. Debit Finished Goods Inventory $807,200
Credit Work-in-Process- Tufting $807,200
To record the transfer to Finished Goods.
I. Debit Cost of Goods Sold $795,200
Credit Finished Goods $795,200
To record the cost of goods sold.
2. January 31 balances of the inventory accounts:
Finished Goods = $74,000
Work-in-Process - Spinning = $28,000
Work-in-Process - Tufting = $32,300
Materials = $46,500
3. Factory Overhead Accounts:
Overhead - Spinning:
B. Materials (Indirect) 46,000
C. Indirect labor 18,500
D. Depreciation exp. 12,500
E. Factory insurance 2,000
F. Applied overhead 80,000
Overapplied overhead 1,000
Overhead - Tufting:
B. Materials (Indirect) 39,500
C. Indirect labor 9,000
D. Depreciation exp. 8,500
E. Insurance expense 1,000
F. Applied overhead 55,000
Underapplied overhead 3,000
Explanation:
a) Data and Calculations:
January 1 Inventories:
Finished Goods = $62,000
Work in Process- Spinning = $35,000
Work in Process - Tufting = $28,500
Materials = $17,000
Finished Goods
Account Titles Debit Credit
Beginning balance $62,000
Work-in-Process-Tufting 807,200
Cost of Goods Sold $795,200
Ending balance 74,000
Work-in-Process - Spinning
Account Titles Debit Credit
Beginning balance $35,000
B. Materials 275,000
C. Direct labor 185,000
F. Applied overhead 80,000
G. Work-in-Process -Tufting $547,000
Ending balance 28,000
Work-in-Process - Tufting
Account Titles Debit Credit
Beginning balance $28,500
B. Carpet backing 110,000
C. Direct labor 98,000
E. Insurance expense 1,000
F. Applied overhead 55,000
G. WIP- Spinning 547,000
H. Finished Goods $807,200
Ending balance 32,300
Cost of Goods Sold
I. Finished Goods $795,200
Materials
Account Titles Debit Credit
Beginning balance $17,000
A. Accounts receivable 500,000
B. Work-in-Process - Spinning $275,000
B. Work-in-Process - Spinning 46,000
B. Work-in-Process - Tufting 39,500
B. Work-in-Process - Tufting 110,000
Ending balance 46,500
