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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Cost of production and journal entries

Lighthouse Paper Company manufactures newsprint. The product is manufactured in two departments, Papermaking and Converting. Pulp is first placed into vessel at the beginning of papermaking production. The following information concerns production in the Papermaking Department for March:

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a. Prepare the following March journal entries for the Papermaking Department:

1. The materials charged co production

2. The conversion costs charged to production

3. The completed production transferred to the converting Department

b. Determine the Work in Process—Papermaking Department March 31 balance.

(a-1)

To determine

Equivalents units for production

The activity of a processing department in terms of fully completed units is known as equivalent units. It includes the completed units of direct materials and conversion cost of beginning work in process, units completed and transferred out, and ending work in process.

Cost per unit

Total unit cost is the cost incurred by the company to produce one unit of product. The unit cost is calculated by dividing the units produced with the total cost.

(a-1)

To Prepare: The journal entry to record materials charged to production for papermaking department of Company LP.

Explanation

Prepare the journal entry to record material charged to production for casting department of Company LP as shown below:

Account title and Explanation Debit Credit
work in process – Papermaking Department $330,750
 Materials - Pulp ...

(a-2)

To determine

To Prepare: The journal entry to record conversion costs charged to production for papermaking department of Company LP.

(a-3)

To determine

To Prepare: The journal entry to record transferred out to converting department of Company LP.

(b)

To determine
The ending work in process balance for papermaking department of Company LP.

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