Li Company produces large quantities of a standardized product. The following information is available for its production activities for January.

Additional information about units and costs of production activities follows.

During January, 55,000 units of finished goods are sold for $50 cash each. Cost information regarding finished goods follows.
Beginning finished goods inventory . . . . . . . . . $155,000
Cost transferred in . . . . . . . . . . . . . . . . . . . . . 599,640
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . (612,500)
Ending finished goods inventory . . . . . . . . . . . $142,140

Required
1. Prepare journal entries dated January 31 to record the following January activities:
(a) Purchase of raw materials,
(b) Direct materials usage,
(c) Indirect materials usage,
(d) Factory payroll costs,
(e) Direct labor costs used in production,
(f) Indirect labor costs,
(g) Other overhead costs€”credit Other Accounts,
(h) Overhead applied,
(i) Goods transferred to finished goods, and
(j) Sale of finished goods.
2. Prepare a process cost summary report for this company, showing costs charged to production, units cost information, equivalent units of production, cost per EUP, and its cost assignment and reconciliation.
Analysis Component
3. The company provides incentives to its department managers by paying monthly bonuses based on their success in controlling costs per equivalent unit of production. Assume that the production department underestimates the percentage of completion for units in ending inventory with the result that its equivalent units of production in ending inventory for January are understated. What impact does this error have on the January bonuses paid to the production managers? What impact, if any, does this error have on Februarybonuses?

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Raw materials Factory overhead incurred Beginning inventory. Raw materials purchased (on credt) Direct materlals used Indirect matertals used Ending Inventory. 26,000 255,000 Indirect labor used 50,000 159.308 $290,808 (172.000) Oher overhead costs (81,500) Total factory overhead Incurred 27,500 Factory overhead applied (l 40% of direct labor cost) Factory payroll Direct labor used . indirect labor used ···· Total payroll cost (paid in cash) . 50,000 $257,720 Units Costs Beginning goods in process Inventory Started 2.200 Beginning goods In process Inventory 30,000 Direct materlals$3,500 3,225 Ending goods In process Inventory.. 5,900 Direct labor.... Factory overhead4515 11240 172,000 207,720 290.808 $681.768 82,128 Status of ending goods in process Inventory Direct materials added.. Direct labor added Overhead applied (140% of direct labor) Total costs Ending goods in process iInventory Materials-Percent complete . . . . . . . . . Labor and overhead-Percent complete 50% 65%