Step by Step Assistance

Tuesday, 6 November 2012

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

Problem 20-3A Journalizing in process costing; equivalent units and costs L.O. C2, P1, P2, P3
[The following information applies to the questions displayed below.]

Li Company produces large quantities of a standardized product. The following information is available for its production activities for January.
Raw materials Factory overhead incurred
Beginning inventory $ 19,000 Indirect materials used $ 81,000
Raw materials purchased (on credit) 315,000 Indirect labor used 50,000
Direct materials used (172,000 ) Other overhead costs 151,380


Indirect materials used (81,000 ) Total factory overhead incurred $ 282,380







Ending Inventory $ 81,000






Factory overhead applied
Factory payroll (140% of direct labor cost)
Direct labor used $ 201,700 Total factory overhead applied $ 282,380




Indirect labor used 50,000



Total payroll cost (paid in cash) $ 251,700








Additional information about units and costs of production activities follows.
Units Costs
Beginning goods in process inventory 2,400 Beginning goods in process inventory
Started 24,000 Direct materials $ 3,500
Ending goods in process inventory 5,200 Direct labor 2,900
Factory overhead 3,800


$ 10,200
Status of ending goods in process inventory Direct materials added 172,000
Materials—Percent complete 80 % Direct labor added 201,700
Labor and overhead—Percent complete 75 % Overhead applied (140% of direct labor) 282,380


Total costs $ 666,280




Ending goods in process inventory $ 105,032


During January, 18,000 units of finished goods are sold for $140 cash each. Cost information regarding finished goods follows.
Beginning finished goods inventory $ 160,000
Cost transferred in 561,248
Cost of goods sold (606,390 )



Ending finished goods inventory $ 114,858







Section BreakProblem 20-3A Journalizing in process costing; equivalent units and costs L.O. C2, P1, P2, P3
6.
award:
10 out of
10.00 points
Problem 20-3A Part 1
Required:
1(a)
Prepare journal entry dated January 31 to record the purchase of raw materials. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Raw materials inventory correct 315,000 correct
Accounts payable correct 315,000 correct


1(b)
Prepare journal entry dated January 31 to record the direct materials usage. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Goods in process inventory correct 172,000 correct
Raw materials inventory correct 172,000 correct

1(c)
Prepare journal entry dated January 31 to record the indirect materials usage. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Factory overhead correct 81,000 correct
Raw materials inventory correct 81,000 correct

1(d)
Prepare journal entry dated January 31 to record the factory payroll costs. (Omit the "$" sign in your response.)

Date General Journal Debit Credit
Jan. 31 Factory payroll correct 251,700 correct
Cash correct 251,700 correct

1(e)
Prepare journal entry dated January 31 to record the direct labor costs used in production. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Goods in process inventory correct 201,700 correct
Factory payroll correct 201,700 correct

1(f)
Prepare journal entry dated January 31 to record the indirect labor costs. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Factory overhead correct 50,000 correct
Factory payroll correct 50,000 correct

1(g)
Prepare journal entry dated January 31 to record the other overhead costs—credit Other Accounts. (Omit the "$" sign in your response.)

Date General Journal Debit Credit
Jan. 31 Factory overhead correct 151,380 correct
Other accounts correct 151,380 correct

1(h)
Prepare journal entry dated January 31 to record the overhead applied. (Omit the "$" sign in your response.)

Date General Journal Debit Credit
Jan. 31 Goods in process inventory correct 282,380 correct
Factory overhead correct 282,380 correct

1(i)
Prepare journal entry dated January 31 to record the goods transferred to finished goods. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Finished goods inventory correct 561,248 correct
Goods in process inventory correct 561,248 correct

1(j)
Prepare journal entries dated January 31 to record the sale of finished goods. (Omit the "$" sign in your response.)
Date General Journal Debit Credit
Jan. 31 Cash correct 2,520,000 correct
Sales correct 2,520,000 correct
Cost of goods sold correct 606,390 correct
Finished goods inventory correct 606,390 correct

WorksheetProblem 20-3A Part 1

7.
award:
9.57 out of
11.00 points
Problem 20-3A Part 2
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. (Due to rounding of cost per unit, the total costs accounted for in the cost summary may not equal to sum of all the costs given in the problem. Round your cost per EUP answers to 2 decimal places and consider the same in the other calculations. Round other answers to the nearest dollar amount. Omit the "$" sign in your response.)
LI COMPANY
Process Cost Summary
For Month Ended January 31
Costs Charged to Production
Costs of beginning goods in process
Direct materials correct $ correct
Direct labor correct correct
Factory overhead correct correct

$ 10,200 correct
Costs incurred this period
Direct materials correct $ correct
Direct labor correct correct
Factory overhead correct correct

656,080 correct

Total costs to account for $ 666,280 correct




Unit cost information
Units to account for Units accounted for
Beginning goods in process correct correct Completed & transferred out correct correct
Units started this period correct correct Ending goods in process correct correct


Total units to account for 26,400 correct Total units accounted for 26,400 correct






Equivalent units of production Direct Materials Direct Labor Factory Overhead
Units completed & transferred out correct 21,200 correct EUP 21,200 correct EUP 21,200 correct EUP
Units of ending goods in process correct 4,160 correct EUP 3,900 correct EUP 3,900 correct EUP



Equivalent units of production 25,360 correct EUP 25,100 correct EUP 25,100 correct EUP








Cost per EUP Direct Materials Direct Labor Factory Overhead
Cost of beginning goods in process correct $ 3,500 correct $ 2,900 correct $ 3,800 correct
Costs incurred this period correct 172,000 correct 201,700 correct 282,380 correct









Total costs $ 175,500 correct $ 204,600 correct $ 286,180 correct
Equivalent units of production correct 25,360 correct EUP 25,100 correct EUP 25,100 correct EUP









Cost per EUP $ 6.92 correct Per EUP $ 8.15 correct Per EUP $ 11.40 correct Per EUP




















Cost assignment and reconciliation
Costs transferred out
Direct materials correct $ incorrect
Direct labor correct incorrect
Factory overhead correct incorrect

$ 561,235 incorrect
Costs of ending goods in process
Direct materials correct $ incorrect
Direct labor correct incorrect
Factory overhead correct incorrect

105,045 incorrect

Total costs to account for $ 666,280 incorrect



WorksheetProblem 20-3A Part 2