Mahusay, Jeth A.

December 28, 2020

Neil Churchill, CPA BSA-3
ACC 3112
MODULE 2: Major Output

Samuel Manufacturing Corp. applies the just-in-time philosophy in

its materials procurement and production systems. It uses backflush
accounting and the following selected transactions occurred in one
of its products in the month of January 2012:

Raw materials purchases, 12,000lbs @P10, P126,000

Standard costs per unit:
Materials, 4 lbs. @P10, P40.00
Conversion costs, P20.00

Production costs with 3,000 units

Direct material used 11,400lbs
Conversion costs P62,000

Sales, 3,000 units

Required: Record the foregoing transactions assuming that the

materials are backflushed at the date of completing the goods
produced.

Transactions Accounts Debit Credit

a. Rawmaterials No Entry
purchases
b. Incurrence of Conversion Cost P 62,000 P 62,000
conversion cost
Accounts
Payable
c. Finished goods Finished Goods P P 126,000
completed, materials Accounts 126,000
are backflushed to Payable
finished goods
d. To close conversion Cost f Goods Sold P 62,000 P 62,000
cost to cost of goods
Conversion Cost
sold
e. Transfer of finished Cost of Goods Sold P P 126,000
goods to cost of 126,000
Finished Goods
goods sold