Two Departments, Journal Entries with Supporting CalculationsWeighted AverageMethod (Note: This problem includes two departments. The second department
Question:
Two Departments, Journal Entries with Supporting Calculations—Weighted AverageMethod (Note: This problem includes two departments. The second department may be beyond thescope of most classes. Instructors may choose to assign only the requirements related to Department 1.)
Patterson Laboratories, Inc., produces one of its products in two successive departments. All materials are added at the beginning of the process in Department 1; no materials are used in Department 2.
Conversion costs are incurred evenly in both departments. Patterson uses the weighted average methodfor process costing. January 1, 2019, inventory account balances are as follows:
Materials inventory ............................................................ $30,000
Work-in-process—Department 1 (3,000 units, 30% complete)
Direct materials............................................................. 4,560
Conversion costs ........................................................... 10,640
Work-in-process—Department 2 (3,550 units, 40% complete) .......................... 43,439
Finished goods inventory (2,000 units @ $16)....................................... 32,000
During January, the following transactions occurred:
1. Purchased materials on account, $90,000.
2. Placed $84,000 of materials into process in Department 1. This $84,000 represents 24,000 unitsof materials.
3. Distributed total payroll costs: $108,116 of direct labor to Department 1, $62,700 of direct laborto Department 2, and $51,000 of indirect labor to Manufacturing Overhead.
4. Incurred other actual manufacturing overhead costs, $81,000. (Credit Other Accounts.)
5. Applied overhead to the two processing departments: $88,000 to Department 1 and $43,900 toDepartment 2.
6. Transferred 25,000 completed units from Department 1 to Department 2. The 2,000 units remainingin Department 1 were 20% completed with respect to conversion costs.
7. Transferred 26,000 completed units from Department 2 to finished goods inventory. The 2,550units remaining in Department 2 were 70% completed with respect to conversion costs.
8. Sold 20,000 units on account at $27 per unit. Patterson uses weighted average inventory costingprocedures for the finished goods inventory.
Required
a. Record the January transactions in general journal form for Department 1 and Department 2.
b. Prepare a product cost report (with its supporting calculations) for Department 1.
c. Prepare a product cost report (with its supporting calculations) for Department 2.
d. Determine the balances remaining in the Materials Inventory account, in each work-in-processaccount, and in the Finished Goods Inventory account.
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom