Tough Hardware purchases raw materials and processes those purchases through a receiving/inspection process prior to stocking for production. Tough places 3 purchase orders for materials for production and receives the goods that day. The first PO is for 2,500 1/2" × 96" milling blanks at $2.75 each. The second is for 4,000 pieces of 48" × 96" × 1" sheet steel at $15.55 each. The third PO is for five 5 gallon drums of milling lubrication oil at $475.00 per barrel.
The receiving/inspection process is completed and the goods are transferred from Receiving Inventory to Raw Materials. The Receiving/Inspection Department assigns manufacturing overhead of $55.00 per purchase order as well as $2.75 per piece on metal goods and $35.00 per container on fluids. All labor is allocated through overhead.
Required:
a. Write the journal entry to purchase and receive these items to Receiving Inventory on account.
b. Assign overhead to the metal goods.
c. Assign overhead to the fluid goods.
d. Transfer all goods to Raw Materials Inventory.
Refer to the Chart of Accounts for exact wording of account titles.