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Problem 2 Jit

The Magnolia Corporation uses a cycle counting process to value inventory each month. Journal entries are needed to record inventory and cost of goods sold transactions for the month of June. The entries debit raw materials and finished goods inventory accounts for beginning balances and materials received or completed during the period, and credit the accounts for ending balances and cost of goods sold. Conversion costs are also adjusted between inventory accounts.

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Christian J. Abbatuan
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515 views2 pages

Problem 2 Jit

The Magnolia Corporation uses a cycle counting process to value inventory each month. Journal entries are needed to record inventory and cost of goods sold transactions for the month of June. The entries debit raw materials and finished goods inventory accounts for beginning balances and materials received or completed during the period, and credit the accounts for ending balances and cost of goods sold. Conversion costs are also adjusted between inventory accounts.

Uploaded by

Christian J. Abbatuan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

PROBLEM 2.

The MagnoliaCorporationhas a cycle time of 1.5 days, uses a Raw and In-Process (RIP)
inventory account and expenses all conversion costs to the cost of goods sold account.  At
the end of each month, all inventories are counted, their conversion cost components are
estimated, and inventory account balances are adjusted accordingly.  Raw material cost is
backflushed from RIP to Finished Goods.  The following information is for the month of
June:

Beginning balance of RIP account, including P2,400 of conversion cost           P23,400

Beginning balance of finished goods account, including P8,000 of

conversion cost.............................................................................................              24,000

Raw materials received on credit...................................................................          444,000

Ending RIP inventory per physical count, including P3,600 conversion

cost estimate............................................................................................               25,600

Ending finished goods inventory per physical count, including P7,000

conversion cost estimate........................................................................               19,000

Direct labor – P210,000; factory overhead – P189,000  

Required:  Prepare journal entries to record the given transactions

Journal Entries
Accounts Debit Credit
1. Raw and In Process 444,000
Accounts Payable 444,000
2. Finished Goods 443,000
Raw and In Process 443,000

Raw Materials Purchased 444,000


RIP Beg. (23,400-2,400) 21,000
RIP End (25,600-3,600) (22,000)
Materials Content of units completed 443,000
Cost of Goods Sold 399,000
Accrued Payroll 210,000
Factory Overhead 189,000

3. Cost of Goods Sold 447,000


Finished Goods 447,000

Material content of units completed 443,000


FG Beg. (24,000-8,000) 16,000
FG End. (19,000-7,000) (12,000)
Material content of units sold 447,000

4. Raw and In process 200


Cost of Goods Sold 200

Conversion Cost RIP FG


End. 3,600 7,000
Beg, (2,400) (8,000)
Increase (Decrease) 1,200 (1,000)

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