The Mezcal Manufacturing Company has a mature JIT production system with average cycle time of less than
Question:
Beginning balances in inventory accounts:
Raw and In Process .............................. $ 31,300
Finished Goods ................................... 280,000
Supplies ............................................ 27,000
The May I RIP balance consisted of a $30,000 cost of materials, most of which were not yet in process, plus a $1,300 conversion cost estimate assigned to partially processed work. The Finished Goods balance consisted of $150,000 materials cost and a $130,000 estimate of conversion cost.
May 31 inventories based on physical count:
Raw and In Process ....................................... $ 37,100
Finished Goods ........................................... 294,000
Supplies ..................................................... 17,000
The May 31 RIP amount consisted of a $35,000 cost of materials, most of which were not yet in process, plus a $2,100 conversion cost estimate assigned to partially processed work. The Finished Goods amount consisted of $160,000 material cost and a $134,000 estimate of conversion cost.
(a) Direct materials received on credit cost $620,000.
(b) Indirect materials used cost $10,000.
(c) Gross payroll of $300,000 was recorded; the payroll was paid.
(d) The payroll distribution was:
Direct labor .................................................. $ 50,000
Indirect factory labor ...................................... 90,000
Marketing salaries ......................................... 90,000
Administrative salaries ..................................... 70,000
(e) Factory overhead costs:
Depreciation ................................................... $514,000
Insurance ....................................................... 9,000
(f) Miscellaneous factory overhead costs:
Paid in cash ..................................................... $ 26,000
On account ..................................................... 7,000
(g) The factory overhead accumulated in the factory overhead control account was expensed to Cost of Goods Sold.
(h) The materials cost component of completed work is back flushed from RIP.
(i) The materials cost component of work sold is back flushed from Finished Goods.
(j) Ending balances are established in inventory accounts by adjusting their conversion cost components.
Required:
(1) Prepare journal entries based on the preceding information.
(2) Prepare completed T accounts for RIP, Finished Goods, and Cost of Goods Sold.
Distribution
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