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Re-Tire produces bagged mulch made from recycled tires. Production involves shredding tires and packaging the pieces for sale in the bagging department. All direct materials enter in the first process. The following describes production operations for October.

Direct materials used $226,000
Direct labor used 30% in Shredding; 70% in Bagging. $112,000
Predetermined overhead rate (based on direct labor) 165 %
Transferred to Bagging $206,500
Transferred to finished goods $583,000

The company's revenue for the month totaled $470,000 from credit sales, and its cost of goods sold for the month is $240,000.

Required:
Prepare summary journal entries dated October 31 to record its October production activities for:

a. Direct materials usage
b. Direct labor incurred
c. Overhead applied
d. Goods transfer from Shredding to Bagging.
e. Goods transfer from Bagging to finished goods.
f. Credit sales
g. Cost of goods sold.

Respuesta :

Zviko

Answer:

a.

Work In Process : Direct Materials $226,000 (debit)

Raw Materials $226,000 (credit)

Direct Materials used in production

b.

Work In Process : Shredding $33,600 (debit)

Work In Process : Bagging $78,400 (debit)

Salaries Payable $112,000 (credit)

Direct labor incurred during production

c.

Work In Process : Shredding $55,440 (debit)

Work In Process : $129,360 Bagging

Overheads $184,800 (credit)

Overheads applied to production cost

d.

Work In Process : Bagging $206,500 (debit)

Work In Process : Shredding $206,500 (credit)

Manufacturing costs transferred from Shredding to Bagging

e.

Work In Process : Shredding $583,000 (debit)

Finished Goods $583,000 (credit)

Manufacturing Costs  transfer from Bagging to finished goods

f.

Account Receivable $470,000 (debit)

Sales Revenue $470,000 (credit)

Credit Sales during the month

g.

Cost of Goods Sold $240,000 (debit)

Finished Goods $240,000 (credit)

Cost of Goods Sold during the month

Explanation:

See the Journal entries and their narrations prepared above

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