a. Port Ormond Carpet Company
January 18th, 2023
a. Port Ormond Carpet Company manufacturescarpets. Fiber is placed in process in the Spinning Department,where it is spun into yarn. The output of the Spinning Departmentis transferred to the Tufting Department, where carpet backing isadded at the beginning of the process and the process is completed.On January 1, Port Ormond Carpet Company had the followinginventories:
| Finished Goods | $62,000 |
| Work in Process-Spinning Department | 35,000 |
| Work in Process-Tufting Department | 28,500 |
| Materials | 17,000 |
Departmental accounts are maintained for factory overhead, andboth have zero balances on January 1. Manufacturing operations forJanuary are summarized as follows:
| Jan. | 1 | Materials purchased on account, $500,000 |
| 2 | Materials requisitioned for use: | |
| Fiber—Spinning Department, $275,000 | ||
| Carpet backing—Tufting Department, $110,000 | ||
| Indirect materials—Spinning Department, $46,000 | ||
| Indirect materials—Tufting Department, $39,500 | ||
| 31 | Labor used: | |
| Direct labor—Spinning Department, $185,000 | ||
| Direct labor—Tufting Department, $98,000 | ||
| Indirect labor—Spinning Department, $18,500 | ||
| Indirect labor—Tufting Department, $9,000 | ||
| 31 | Depreciation charged on fixed assets: | |
| Spinning Department, $12,500 | ||
| Tufting Department, $8,500 | ||
| 31 | Expired prepaid factory insurance: | |
| Spinning Department, $2,000 | ||
| Tufting Department, $1,000 | ||
| 31 | Applied factory overhead: | |
| Spinning Department, $80,000 | ||
| Tufting Department, $55,000 | ||
| 31 | Production costs transferred from Spinning Department toTufting Department, $547,000 | |
| 31 | Production costs transferred from Tufting Department toFinished Goods, $807,200 | |
| 31 | Cost of goods sold during the period, $795,200 |
| Required: | |
| 1. | Journalize the entries to record the operations, using thedates provided with the summary of manufacturing operations. Referto the Chart of Accounts for exact wording of account titles. |
| 2. | Compute the January 31 balances of the inventory accounts. |
| 3. | Compute the January 31 balances of the factory overheadaccounts. |
| CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Port Ormond Carpet Company | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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b. Compute the January 31 balances of theinventory accounts.
| Materials | ||
| Work in Process: | ||
| • Spinning Department | ||
| • Tufting Department | ||
| Finished Goods |
c. Compute the January 31 balances of thefactory overhead accounts.
| Factory Overhead: | ||
| • Spinning Department | ||
| • Tufting Department |
Answer:
1.
| Date | Debit | Credit | |
| Jan-01 | Materials | 500,000.00 | |
| Accounts Payable | 500,000.00 | ||
| Jan-02 | Work in Progress- SpinningDepartment | 275,000.00 | |
| Work in Progress- TuftingDepartment | 110,000.00 | ||
| Factory Overhead- SpinningDepartment | 46,000.00 | ||
| Factory Overhead- TuftingDepartment | 39,500.00 | ||
| Materials | 470,500.00 | ||
| Jan-31 | Work in Progress- SpinningDepartment | 185,000.00 | |
| Work in Progress- TuftingDepartment | 98,000.00 | ||
| Factory Overhead- SpinningDepartment | 18,500.00 | ||
| Factory Overhead- TuftingDepartment | 9,000.00 | ||
| Wages payable | 310,500.00 | ||
| Jan-31 | Factory Overhead- SpinningDepartment | 12,500.00 | |
| Factory Overhead- TuftingDepartment | 8,500.00 | ||
| Accumulated Depreciation | 21,000.00 | ||
| Jan-31 | Factory Overhead- SpinningDepartment | 2,000.00 | |
| Factory Overhead- TuftingDepartment | 1,000.00 | ||
| Prepaid insurance | 3,000.00 | ||
| Jan-31 | Work in Progress- SpinningDepartment | 80,000.00 | |
| Work in Progress- TuftingDepartment | 55,000.00 | ||
| Factory Overhead- SpinningDepartment | 80,000.00 | ||
| Factory Overhead- TuftingDepartment | 55,000.00 | ||
| Jan-31 | Work in Progress- TuftingDepartment | 547,000.00 | |
| Work in Progress- SpinningDepartment | 547,000.00 | ||
| Jan-31 | Finished Goods inventory | 807,200.00 | |
| Work in Progress- TuftingDepartment | 807,200.00 | ||
| Jan-31 | Cost of Goods Sold | 795,200.00 | |
| Finished Goods inventory | 795,200.00 |
2.
| Material | Work in Progress | Finished Goods | ||
| Spinning Department | Tufting Department | |||
| Beginning Balance | 62,000.00 | 35,000.00 | 28,500.00 | 17,000.00 |
| Addition | 500,000.00 | 540,000.00 | 810,000.00 | 807,200.00 |
| Usage | – 470,500.00 | – 547,000.00 | – 807,200.00 | – 795,200.00 |
| Ending Balance | 91,500.00 | 28,000.00 | 31,300.00 | 29,000.00 |
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